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Thursday, March 28, 2024

Bangko Sentral expects higher August inflation

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The Bangko Sentral ng Pilipinas said Tuesday inflation in August likely accelerated from 4 percent in July on the back of higher prices of electricity, liquefied petroleum gas and food.

It said in a statement the August inflation was expected to settle within a range of 4.1 percent to 4.9 percent.

“Higher prices for LPG, Meralco electricity and key food items along with the depreciation of the peso are sources of upward price pressures during the month. These could be offset in part by the decline in domestic petroleum and rice prices,” the BSP said.

Inflation in July decelerated to a seven-month low of 4.0 percent from 4.1 percent in June, pulled down by lower annual increases in the transport and alcoholic beverages and tobacco indices. The July inflation was still faster than the 2.7 percent a year ago.

Inflation in the first seven months averaged 4.4 percent, beyond the target range of 2 percent to 4 percent.

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BSP Governor Benjamin Diokno earlier said monetary authorities remained ready to deploy appropriate monetary policy tools to safeguard price and financial stability objectives.

He said maintaining the accommodative monetary policy stance for as long as necessary would support the economy’s recovery amid the adverse impact of the COVID-19 pandemic.

Citing latest developments, Diokno said global inflation picked up in 2021 but the nature of recent price pressures was largely transitory. He said the recent rise in global inflation was largely influenced by pandemic-induced changes in spending patterns, increased commodity prices, temporary demand-pull price pressures and base effects.

He said the latest BSP baseline forecasts indicated that inflation could settle close to the high-end of government’s target range at 4.1 percent and close to the midpoint of the target at 3.1 percent for 2022 and 3.1 percent for 2023.

Diokno said the possible further uptick in global commodity prices due to strong global demand amid supply chain bottlenecks could pose upside risks to domestic inflation in the near term.

The Monetary Board in its latest policy meeting retained the policy rate at a record low of 2 percent to support economic growth amid the continuing global pandemic.

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