BSP sees inflation to stay high this year

CEBU, Philippines — The Bangko Sentral ng Pilipinas expects inflation to remain elevated this year as both domestic and external factors continue to rise up price pressures.

Zeno Ronald Abenoja, senior director at the Department of Economic Research of the Bangko Sentral ng Pilipinas, said yesterday the central bank expects inflation to settle above the high-end of its 2-4 percent target but also sees it to revert to the target range by next year.

Speaking at inflation outlook forum in Cebu City yesterday, Abenoja cited upside factors affecting consumer prices, including wage adjustments, rising transport costs, electricity increases.

He also cited the need to pass the law allowing the tariffication of rice imports to bring down the cost of the staple.

He said if this is implemented in the fourth quarter, it could possibly bring down inflation by end of the year through 2019.

The BSP said the rising global oil prices has also continued to affect inflation which rose 5.7 percent in July from 5.2 percent in June.

The higher inflation in July was attributed largely to the increase in prices of food, utilities, and transport services. Some tightness in domestic supply conditions linked to recent weather-related disturbances — resulted in higher prices of some food items, particularly rice, meat, fish, and vegetables.

The BSP had said it stands ready to undertake strong follow-through monetary policy action to help ensure that 2019 inflation target is achieved.

Earlier, the country's economic managers reiterated the current price pressures emanate mainly from supply-side factors.

"Addressing supply constraints to curb inflation is the utmost priority of the government," the National Economic and Development Authority and Departments of Finance and Budget and Management had said in a joint statement.

They had noted inflation will taper off towards the end of 2018, echoing the BSP’s near-term outlook.

“Part of the supply problem is the country’s declining rice stock inventory — caused by weather disturbances in the country and in other rice-producing countries like Thailand and Vietnam — which is taking a toll on the prices of rice,” they said.