Inflation to remain within target despite 50-centavo jeepney fare hike—BSP

MANILA, Philippines—The increase in consumer prices for this year is still expected to move within the official target of 3 to 5 percent even with the approval of a 50-centavo increase in the minimum jeepney fare.

This is according to the Bangko Sentral ng Pilipinas, which said that it incorporated an assumption that the minimum jeepney fare would rise by 50 centavos when it made a forecast of inflation averaging 3.1 percent in 2012.

“The approved fare hike can be accommodated,” BSP Deputy Governor Diwa Guingundo said, explaining that the approved amount of increase in jeepney fare would not cause inflation to breach target levels.

The BSP set its inflation target for the year at 3 to 5 percent, believing such a range is something that will not be disruptive to the economy. In the first two months of the year, inflation averaged at 3.3 percent, according to the National Statistics Office.

The Land Transportation Franchising and Regulatory Board (LTFRB) announced on Tuesday it had approved a 50-centavo increase in minimum jeepney fare.

The increase was in response to calls by jeepney operators for a fare increase amid rising fuel prices.

Global oil prices, which directly affect cost of oil in the domestic market, have been on the rise amid concerns over potential supply disruption in the months ahead because of the tension between Iran and European countries.

Iran is being pressured to stop its nuclear program, with European countries deciding to ban imports from the Middle Eastern country. On the other hand, Iran has also announced it would cut supply to Western countries.

The Philippines imports almost all its oil requirements.

Despite oil problems, the BSP said that inflation for the year would likely fall within the target given other factors, such as favorable food supply.

“We expect inflation to be within the target,” Guinigundo said on Tuesday, in an ambush interview at the sidelines of a launching of a BSP project for the setting up of an electronic system for the processing, approving and registering of foreign currency-denominated loans applied for by enterprises.

Under the project, called the Foreign Loan Approval and Registration System (FLAReS), enterprises seeking approval of the BSP of their applications for foreign currency-denominated loans may transact with the BSP through an online facility. This eliminates the old system that entails manual processing of transactions.