BSP expects higher 4.7% inflation rate in February

Published February 28, 2021, 7:00 AM

by Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) is projecting inflation to rise to 4.7 percent in February versus 4.2 percent in January.

BSP Governor Benjamin E. Diokno said the forecast range is a low of 4.3 percent to a high of 5.1 percent for the said month.

Diokno, quoting the BSP’s Department of Economic Research, said the 4.7 percent point inflation projection for February stems from the higher global price of oil.

BSP Governor Benjamin E. Diokno (Bloomberg file)

The BSP said the upward price pressure came from the “continued uptick in global crude oil prices and elevated fish prices” while the temporary price caps on meat products in the National Capital Region that includes Metro Manila, as well as “stable rice prices and lower power rates in Meralco-serviced areas” also eased the price pressures in February.

The BSP has said that elevated inflation is temporary in nature, coming mainly from supply-side shocks.

Diokno said last week that the central bank continued to balance an accommodative policy and financial stability on the back of a supply-side driven inflation uptick on oil and meat prices since January. They don’t think it will be demand-driven yet since the economy has yet to recover.

In keeping monetary policy stable, Diokno said in a forum Friday that the BSP “will remain vigilant over the current inflation dynamics and operating environment with a forward-looking perspective to ensure that the monetary policy stance continues to support economic recovery and address any risks to our price stability mandate.”

Inflation rate breached the two-four percent target in January due to a recovery in global oil prices, bad weather and the African Swine Fever outbreak. Still, Diokno said there was limited evidence of second-round effects such as wage and transport fare increases.

In 2020, the first pandemic year, inflation settled at 2.6 percent which was within the target range of two to four percent.