BSP sees August inflation at 5.9%

INQUIRER PHOTO/ JAM STA ROSA

Inflation likely climbed to another high of 5.9 percent year-on-year in August even as price increases from a month ago slowed down, the Bangko Sentral ng Pilipinas (BSP) said Friday.

Citing the projection of its Department of Economic Research, the BSP said in a statement that headline inflation would have settled within the range of 5.5-6.2 percent in August.

The BSP blamed the year-on-year increase in average consumer prices to higher rice and food prices mainly due to weather disturbances as well as supply disruptions, on top of higher gasoline, LPG and electricity costs.

Tempering the upward price pressures in August were the decline in diesel and kerosene prices, as well as a “modestly appreciated” peso.

This forecast of central bank economists “implies a slight deceleration of the month-on-month inflation,” the BSP said.

It means the change in prices in August compared to July had been slower compared to previous months.

“The BSP will remain watchful of economic and financial developments that could affect the inflation outlook and will closely monitor inflation expectations and emergence of further second-round effects ahead of the September 2018 Monetary Board policy meeting,” it said.

During last Tuesday’s Second Economic Journalists Association of the Philippines (Ejap) Economic Forum, BSP Governor Nestor A. Espenilla Jr. noted that “the inflation momentum is slowing down, as headline inflation has generally declined in month-on-month terms from 0.9 percent in January to 0.5 percent in July.”

“In particular, after spiking in the first quarter of 2018, the month-on-month changes for electricity, tobacco, and sweetened beverages are seen to be slowly tapering off as we head deeper into the third quarter of the year. This supports our analysis that the impact of the excise tax adjustments is transitory,” according to Espenilla.

The BSP chief had said that the inflation momentum will “continue to lose steam” in the near term and return within target by next year.

Last July, headline inflation hit 5.7 percent, bringing the seven-month average to 4.5 percent, already above the government’s full-year target range of 2-4 percent.

Amid higher-than-expected inflation, the BSP’s policymaking Monetary Board hiked the key interest rate by 25 basis points each in May and June, followed by 50 basis points—the aggressive hike in a decade—in August. /kga