Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said October inflation of 4.6 percent is lower than September’s 4.8 percent but inflation is still projected to remain above the two-four percent target for 2021.
“(Inflation) will ease close to the midpoint of the target range in 2022 and 2023,” he said on Friday, Nov. 5.
Diokno reiterated that the balance of risks to the inflation outlook is still on the upside for October until December this year but remains broadly balanced for 2022 and 2023. The BSP forecasts a full-year 2021 inflation average of 4.4 percent and 3.3 percent in 2022.
“The BSP remains of the view that supply-side price pressures are best addressed by timely non-monetary interventions that could ease domestic supply constraints,” said Diokno.
The government is implementing direct measures to ensure enough supply of pork, rice and fish.
“The recent grant of fuel subsidies amounting to P1 billion to affected public utility vehicle operators as well as the increased allowable ridership can help support the transport sector and help prevent second-round effects amid rising oil prices,” said Diokno.
He again stressed that for as long as necessary, the BSP will keep its accommodative monetary stance for a sustained recovery “to the extent that the inflation outlook would allow.”
The Monetary Board has left the policy rate unchanged since November 2020. It will meet on Nov. 18 to reassess its inflation outlook.
Diokno said on Thursday, Nov. 4 that there is still no evidence of second-round effects on inflation despite rising food and oil prices, partly due to the economy that is still recovering and not fully back up, and supply-side pressures.
The recent uptick in inflation has been traced mainly to higher prices of a limited number of consumer price index basket items owing to supply-side pressures that are considered transitory in nature.
The BSP had projected 4.5 percent to a high of 5.3 percent inflation for October. Inflation in September dropped to 4.8 percent from 4.9 percent in August.
Based on the BSP’s private sector economists’ inflation forecast, analysts expect inflation to average at 4.3 percent for this year and 3.2 percent for 2022.
About 17 out of the 21 surveyed private economists said there is a 17.2 percent probability that inflation for 2021 will settle within the two-four percent target range, while a larger 82.3 percent said inflation will remain above four percent. However, the probability that inflation will fall within the target band in 2022 is high at 84.2 percent and 86.7 percent in 2023.