Inflation hits 14-month high in June

Inflation picked up to a 14-month high of 1.9 percent in June on higher food and beverage prices, the Bangko Sentral ng Pilipinas (BSP) reported Tuesday.

The rate of increase in the prices of basic goods last month was the fastest since the 2.2 percent posted in April last year. Inflation in June was also faster than the 1.2 percent recorded a year ago and the 1.6 percent a month ago.

BSP Governor Amando M. Tetangco Jr. attributed the higher rate last June “mainly to greater annual increases in food and nonalcoholic beverages” alongside price adjustments in other nonfood items.

“This turnout is consistent with our assessment that over the policy horizon, monthly inflation will move to within target, although for 2016 we still see the full-year average to be just below/around the low end of the national government’s target range” of 2-4 percent, Tetangco said.

At its policy meeting last month, the BSP’s policy-making Monetary Board slightly cut its inflation forecast for 2016 to 2 percent from 2.1 percent previously on the back of a slower wage increase implemented in midyear.

“We see no need to change the stance of monetary policy for now. But we will continue to monitor developments, particularly the policy actions of advanced economies, including the Fed, in light of Brexit,” Tetangco said.

Tetangco earlier warned of spillover effects in domestic markets that could be more volatile in the near term as a result of the United Kingdom’s vote to leave the European Union, causing global markets to retreat on uncertainty risks.

The BSP was nonetheless “ready to provide liquidity to our market as needed” amid external jitters, Tetangco said.

Moving forward, “the market will also continue to monitor how the economic team will implement the government’s policy agenda,” the BSP chief added, referring to the Duterte administration’s 10-point economic agenda aimed at significantly slashing the poverty rate.

Duterte’s socioeconomic agenda called for continuing and maintaining current macroeconomic policies, including fiscal, monetary and trade policies; instituting progressive tax reform and more effective tax collection while indexing taxes to inflation, in line with the plan to submit to Congress a tax reform package by September; increasing competitiveness and the ease of doing business, drawing upon successful models used to attract business to local cities such as Davao, as well as pursuing the relaxation of the Constitutional restrictions on foreign ownership, except with regards to land ownership, in order to attract foreign direct investments, and accelerating annual infrastructure spending to account for 5 percent of the gross domestic product (GDP), with public-private partnerships playing a key role.