The Bangko Sentral ng Pilipinas (BSP) said it is supporting the national government’s initiatives aimed at boosting the distribution of key food products and address supply-side pressures that exacerbate inflation.

In a statement, the BSP said on Tuesday, Oct. 25, that addressing high consumer prices will require a whole-of-government approach to protect vulnerable sectors of the economy from the impact of high prices.

For this reason, the central bank said the BSP is taking policy actions in tandem with fiscal policy and programs to prevent inflation expectations from becoming more entrenched.

"The BSP remains vigilant in monitoring all risks to the inflation outlook and is prepared to take all necessary monetary policy action to bring inflation toward a target-consistent path over the medium term, and in turn, steer the economy toward a sustainable growth path,” it said.

According to the BSP, the overall supply of agricultural commodities continues to be restricted by low farm productivity and high production costs, worsened by global supply disruptions, persistent animal diseases, and uncertainties due to the Ukraine-Russia conflict.

Other factors that contribute to higher farm output prices are the tariff and non-tariff restrictions on agricultural trade, the central bank said.

“Targeted measures by the national government to improve farm productivity and address bottlenecks for key food items are crucial in mitigating supply-side pressures on inflation,” the BSP said.

Last week, Socioeconomic Planning Secretary Arsenio M. Balisacan said the Marcos administration is particularly concerned about high inflation and intends to expedite efforts to mitigate its debilitating effects.

“Number one priority is still inflation. We will continue to use interest rates to mitigate the effects,” Balisacan said.

Analysis showed that sustained inflation increase in 2022 and 2023 will cause economic growth to slow down, which translates to a lower gross domestic product (GDP) level by 0.6 percent in 2023.

However, rising inflation is expected to eventually return to the medium-term target of two percent to four percent by 2024.

“We believe we are on the right track with the right plans and policies. With your trust and our government's greater sense of urgency, we are confident that we can weather today's economic challenges,” Balisacan said.