Due to higher fuel and meat prices, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Monday, Feb. 28, that inflation for the month of February could settle at 3.2 percent, up from January’s actual rate of three percent.
However, Diokno said inflation may still be lower at 2.8 percent for February. He said the BSP’s “point inflation projection for February is 3.2 percent” but could be lower based on a projection band of 2.8 percent to 3.6 percent.
The BSP chief said the central bank took into consideration the higher fuel prices, higher prices of selected meat products, the slightly higher rice prices, as well as the stable peso, decline in Manila Electric Co. (Meralco) power rates and lower prices of fish and vegetables for the February inflation forecast.
In a statement, the BSP Department of Economic Research said the “series of oil price hikes along with higher prices of rice and meat are the primary sources of inflationary pressures during the month.”
“These could be offset in part by lower electricity rates in Meralco-serviced areas and the observed decrease in prices of fish and vegetables due to easing supply constraints. Looking ahead, the BSP will continue to monitor emerging price developments and possible second-round effects to help achieve its primary mandate of price stability that is conducive to balanced and sustainable economic growth of the economy,” said the BSP-DER.
The January 2022 inflation of three percent was lower compared to December 2021’s 3.2 percent using the 2018-based Consumer Price Index (CPI) series.
Last year, the headline inflation using the 2018-based series was at 3.9 percent which is lower than the 4.5 percent average using the 2012-based CPI.
Diokno has said that inflation will again break the two-four percent target if global crude prices – which has risen past $100 per barrel due to the Russia-Ukraine conflict -- will stay above $95 per barrel on a sustained basis.
The BSP’s latest inflation forecast for 2022 and 2023 is 3.7 percent and 3.3 percent, respectively.
The BSP reiterated its earlier projection that inflation will decelerate in early 2022 but could accelerate towards the upper end of the two-four percent band in the second quarter before moving back to within the target range.