The Bangko Sentral ng Pilipinas (BSP) and the National Economic and Development Authority (NEDA) are optimistic that headline inflation will continue to ease in the coming months.
In his speech during the BSP’s 30th Anniversary Reception for the Banking Community over the weekend, BSP Governor Eli Remolona Jr. said that while inflation remains to be an immediate challenge, it likely already peaked this year.
“While still in the process of recovering from the pandemic, we were hit by an unusual confluence of supply shocks. We were hit, for example, by a spike in global prices of fertilizer -– so not just food prices and not just oil prices. This was due, of course, to the sanctions on [shipping from] Belarus and Russia,” said Remolona.
To temper the rising inflation, the BSP tightened monetary policy.
“Today, we’re beginning to see tantalizing fruits of our efforts. Headline inflation seems to have peaked and looks to be on its way to our target range of 2 to 4 percent,” he said.
Headline inflation hit as high as 8.7 percent in January this year.
As of end-June however, inflation decelerated to 5.4 percent.
Remolona, however, said that the BSP continues to watch for upside risks to inflation which include the El Niño and further supply shocks.
“We will wait and see. We will analyze the data as they arrive, and that analysis will decide monetary policy down the road,” he said.
Official July inflation data is scheduled to be released by the Philippine Statistics Authority (PSA) this week.
NEDA Secretary Arsenio Balisacan also said that the headline inflation in July will continue to go down.
“I think it should continue then, the downward trend [of inflation],” Balisacan said on the sidelines of the BSP’s Bankers Night.
He noted, however, that risks include the increasing oil prices due to the Russia-Ukraine tension.
“We are seeing the oil prices going up a bit, right? We’ll see how the Russia moves in the Ukrainian … but I will say that it will not be as bad in terms of the global reaction of the markets as before because I suppose that you know, the world learned from those further shocks,” said Balisacan. (PNA)
