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MANILA, Philipines—Prices of basic goods and services will continue to rise as the holiday season approaches despite lower inflation in October.
Prices were likely to ease by early 2022, however, according to the Bangko Sentral ng Pilipinas (BSP).
The BSP reiterated that the solution to rising prices lies in the supply side of the problem, not in monetary policy, at this point.
“The balance of risks to the inflation outlook remains on the upside for the remaining months of 2021, but continues to be broadly balanced for 2022 and 2023,” BSP Governor Benjamin Diokno said in a statement.
“The private sector’s inflation expectation is also consistent with inflation reverting back to the target by 2022.”
On Friday (Nov. 5), the Philippine Statistics Authority announced that October 2021 inflation fell to 4.6 percent from the previous month’s 4.9 percent. This was within the BSP’s forecast range of 4.5 to 5.3 percent.
The BSP expects Inflation to average above the target range of 2 to 4 percent this year, but projects it to fall to the midpoint of that same target range over the next two years.
Diokno said the BSP “remains of the view that supply-side price pressures are best addressed by timely non-monetary policy interventions that could ease domestic supply constraints.”
To this end, he noted that the national government is currently pursuing direct measures to enhance the availability of key goods, such as pork, rice and fish.
The recent grant of P1 billion in fuel subsidies to public utility vehicle operators, as well as increased capacity under relaxed COVID rules can also help support the transport sector and help prevent second-round effects amid rising oil prices.
“Looking ahead, the BSP stands ready to maintain its accommodative monetary policy stance for as long as necessary to support the economy’s sustained recovery to the extent that the inflation outlook would allow,” Diokno said. “The BSP is also reviewing its assessment of the price environment ahead of the 18 November monetary policy meeting.”
TSB