Prices of basic goods and services were likely to remain stable in the next three years, according to the government’s economic managers.
They attributed this to policies that protected the Philippine economy from the turbulence of overseas markets.
In a press statement, the Bangko Sentral ng Pilipinas – the main agency in charge of ensuring price stability – said that the Development Budget Coordination Committee (DBCC) decided to keep the current inflation target at 3 percent, plus or minus 1 percent, until the 2020-2022 period.
The target was determined during the DBCC meeting last week.
The government’s inflation target is defined in terms of the average year-on-year change in the consumer price index (CPI) over the calendar year.
The BSP said it announced the inflation target “in line with the BSP’s commitment to transparency and accountability.”
It was also in sync with “forward-looking approach in the conduct of monetary policy,” the BSP added.
It said the 3 percent inflation target continued to be an accurate representation of the BSP’s medium-term price stability goal which would help achieve a balanced and sustainable economic growth.
Forecasts point to inflation being kept within target despite “balance of risks” of prices going up in 2020 and returning to stability in 2021, said the central bank.
It said while price movements could not be ruled out, inflation caused by international commodity prices were expected to remain modest.
The projection, the BSP said, “is supported by the current assessment of favorable demand-supply balance” and slight movements in foreign exchange rate and international commodity prices.
Demand for goods would weigh on prices but these were likely to remain manageable.
Improved productivity in the Philippine economy, bigger spending on infrastructure and structural reforms were clear signs of continued robust economic growth amid stable inflation.
“The BSP remains steadfast in its commitment to its price stability mandate,” the central bank said.
Edited by TSB