Lingering high inflation seen to turn BSP hawkish | Inquirer Business

Lingering high inflation seen to turn BSP hawkish

/ 05:16 AM July 08, 2021

The country’s inflation rate may stay above 4 percent in the coming months amid continuing pressure on pork and oil prices, likely prompting the Bangko Sentral ng Pilipinas (BSP) to hike interest rates.

This is according to a research note from the economic research team of Bank of the Philippine Islands (BPI), commenting on the slowdown in the annual inflation rate to 4.1 percent in June from 4.5 percent in the past three consecutive months.


BPI has revised its full-year inflation forecast to 4.3 percent from 4.5 percent, but this is still above the upper end of the BSP’s 2 percent to 4 percent target range.

“We continue to see upside risks that could keep inflation above 4 percent in the coming months. Despite the reduction in pork tariffs, the price of pork has not shown a substantial decline,” the research said.


BPI also noted several oil price hikes that could jack up local transport costs. It pointed out that upward pressure on global oil prices was persisting amid the reopening of major economies.

“With the restrictions on public transport capacity, this might force operators to increase their fares,” it said.

At the same time, the research noted that the recent depreciation of the peso against the US dollar could increase importation costs.

The local currency is now trading at the 49 level from just 47.90 against the greenback two weeks ago.

“We continue to see the possibility of monetary adjustments in the coming months,” the research said. —Doris Dumlao-Abadilla

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TAGS: Bangko Sentral ng Pilipinas (BSP), Inflation, pork and oil prices
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