BSP Governor Rafael Buenaventura told reporters yesterday that oil prices no longer have a direct impact on domestic prices and the impact of the El Niño weather phenomenon would not be felt until long after it actually hits.
"I think its 3.6 percent," Buenaventura said, referring to the May inflation figure which is due to be announced on June 5.
Buenaventura said prices have remained stable and resilient to the initial shock of volatile oil prices in the world market, indicating a cushion created by the reduction in the country’s dependence on crude oil for its power requirements.
Oil prices have increased by an average of 35 centavos per liter but transport costs have not moved and the prices of most basic commodities have stayed within their seasonal range.
Last Friday and Saturday, fuel pump prices went up by an average of 39 centavos, but Buenaventura said the impact, if any, would show up in the June inflation, a seasonally high-inflation month because of the opening of classes.
The National Economic and Development Authority (NEDA) has said that the Organization of Petroleum Exporting Countries (OPEC) is not likely to sanction excessive increases in the prices of oil and petroleum products.
"Even the OPEC recognizes that it cannot unduly increase oil prices anymore because there are independent players that would ease them out of the market if their prices are too high," said NEDA Director General Dante Canlas.
Once all-powerful, OPEC now has to contend with independent players like Russia, Canlas said. Moreover, countries like the US have been stockpiling since the Sept. 11 attack and OPEC can no longer use oil pricing as the powerful pressure tool that it used to.
NEDA also said food supply has remained stable, ensuring that food prices have remained stable despite the unusual uptick in consumer spending at the end of the school year.
The BSP said it expects monthly inflation to remain low in the first semester, before rising slightly toward the end of the year. The full-year average is expected to decelerate from six percent last year to the lower end of the five- to six-percent inflation target for 2002.
Buenaventura said the BSP’s outlook is based on expectations of a continued favorable trend in world oil prices, stable foreign exchange rate and stable food prices.