The central bank expects inflation rate to remain at the four percent level in the second quarter.
So far, inflation rate for the second quarter months of April and May were unmoving at 4.5 percent. The June inflation rate will be announced on July 6.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the latest May inflation outturn remained consistent with the BSP’s expectations that inflation “will likely remain above the upper end of the target range this quarter (second quarter) as meat and oil prices remain elevated.”
“However, we expect inflation to decelerate to within the target range (of two-four percent) by the second half of 2021 and 2022,” he said during his weekly virtual “GBED Talks” on Thursday. Most private sector economists see inflation rate starting to decrease as early as July.
Diokno also said that the BSP will continue to be vigilant to ensure that policy responses “will neither lead to excessive inflation nor trigger financial stability risks, especially as economic recovery gets underway.”
Risks to the inflation outlook remains broadly balanced, as far as BSP is concerned, but it is also crucial for inflation control that there is enough meat supply in the coming months.
Diokno said last week that the projected decline in the inflation rate will depend on the timely arrival of pork imports to help stabilize domestic prices. He also that the temporary tariff cuts on imported pork will “address supply constraints and ease price pressures on meat products going forward.”
The BSP’s Monetary Board will meet on June 24 for its next policy meeting. It has kept the benchmark rate at a flat two percent for the past three meetings.
The BSP’s latest inflation forecasts for 2021 is 3.9 percent and three percent for 2022 – both averages are within the target band of two-four percent.