MANILA -The monthly inflation readout is still expected to decelerate within the range of 2 percent to 4 percent by the fourth quarter this year despite the uptick in August, according to the Bangko Sentral ng Pilipinas.
Overall inflation revved up to 5.3 percent in August, ending a six-month run of disinflation from 8.7 percent in January to 4.7 percent in July.
The central bank said the August data “remains consistent” with its assessment that inflation would likely approach the target range by the fourth quarter of 2023 but that is “in the absence of further supply shocks.”
The BSP said in a statement that with higher prices of oil and key agricultural commodities driving inflation in August, the rate of increase in prices of goods and services that the average Filipino household commonly buys continues to be more likely higher than forecast rather than lower.
This is due to “the potential impact of additional transport fare increases, higher-than-expected minimum wage adjustments in other regions, persistent supply constraints for key food items, El Niño weather conditions, and possible knock-on effects of higher toll rates on prices of key agricultural items,” the BSP said.
Based on advisories from local oil firms, pump prices of gasoline increased by a total of P5.90 per liter, diesel by P9.90 per liter, and kerosene by P10 per liter.
“The BSP stands ready to adjust the monetary policy stance as necessary to prevent the further broadening of price pressures as well as the emergence of additional second order effects in view of the persistent upside risks to the inflation outlook,” the central bank said.
American financial services group Goldman Sachs said in a commentary that inflation data in August means that the BSP’s benchmark interest rate will stay at 6.25 percent for the remainder of the year.
However, The Netherlands-based ING Bank said the central bank “will not hesitate” to resume tightening in case of further acceleration of price hikes in rice, electricity and transportation.