Diokno sees progressive fall in inflation to continue
Published May 3, 2020 12:00 am
By LEE C. CHIPONGIAN
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said April inflation could drop to a low 1.9 percent or increase to a high of 2.7 percent versus March’s 2.5 percent as progressive fall in inflation is expected to continue.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno. (Bloomberg)
Inflation is a measure of the general increase in prices and fall in the purchasing value of money.
“The progressive fall in inflation will continue,” said Diokno, who is more inclined to predict the low end of the forecast range.
“The collapse in oil prices is expected to moderate inflationary pressure coming from higher prices of rice and other food items along with upward adjustment. in electricity rates in Meralco serviced area,” noted Diokno.
The BSP Department of Economic Research said the still decreasing petroleum prices will “temper inflationary pressures.”
For 2020, the Monetary Board has revised the inflation target from two-four percent to 1.75 percent to 3.75 percent.
Diokno said earlier that inflation forecast for 2020 has been lowered to a flat two percent from 2.2 percent previous projection, and 2.45 percent for 2021.
During the BSP’s last inflation quarterly press briefing, officials said the key considerations for the inflation forecast is the global crude oil prices which has declined because of the lower global demand.
The BSP assumption is that Dubai crude oil prices are expected to average around $31 per barrel in 2020 and $29 per barrel in 2021, lower than the previous assumption by about $11 per barrel in 2020 and $15 per barrel in 2021.
Global growth is another consideration and global economic prospects have weakened further due to the impact of the spread of COVID-19, according to BSP officials.
In the meantime, the BSP expects inflation of below two percent in the third quarter 2020 as a result of the COVID-19 lockdown, and then again by the first quarter of 2021 depending on how long the containment measures will be implemented.
By the second quarter next year, BSP officials think inflation will pick up nearer the government target.
Besides the weakened global economic prospects because of the pandemic, the trend in global non-oil prices and the expectation that US Federal funds rate will remain zero-bound until 2022 are also key considerations for the downside inflation trajectory.
“The risks to the inflation outlook have decidedly shifted toward the downside by March of this year, mainly owing to the potential of the pandemic to dampen aggregate demand,” said Diokno.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno. (Bloomberg)
Inflation is a measure of the general increase in prices and fall in the purchasing value of money.
“The progressive fall in inflation will continue,” said Diokno, who is more inclined to predict the low end of the forecast range.
“The collapse in oil prices is expected to moderate inflationary pressure coming from higher prices of rice and other food items along with upward adjustment. in electricity rates in Meralco serviced area,” noted Diokno.
The BSP Department of Economic Research said the still decreasing petroleum prices will “temper inflationary pressures.”
For 2020, the Monetary Board has revised the inflation target from two-four percent to 1.75 percent to 3.75 percent.
Diokno said earlier that inflation forecast for 2020 has been lowered to a flat two percent from 2.2 percent previous projection, and 2.45 percent for 2021.
During the BSP’s last inflation quarterly press briefing, officials said the key considerations for the inflation forecast is the global crude oil prices which has declined because of the lower global demand.
The BSP assumption is that Dubai crude oil prices are expected to average around $31 per barrel in 2020 and $29 per barrel in 2021, lower than the previous assumption by about $11 per barrel in 2020 and $15 per barrel in 2021.
Global growth is another consideration and global economic prospects have weakened further due to the impact of the spread of COVID-19, according to BSP officials.
In the meantime, the BSP expects inflation of below two percent in the third quarter 2020 as a result of the COVID-19 lockdown, and then again by the first quarter of 2021 depending on how long the containment measures will be implemented.
By the second quarter next year, BSP officials think inflation will pick up nearer the government target.
Besides the weakened global economic prospects because of the pandemic, the trend in global non-oil prices and the expectation that US Federal funds rate will remain zero-bound until 2022 are also key considerations for the downside inflation trajectory.
“The risks to the inflation outlook have decidedly shifted toward the downside by March of this year, mainly owing to the potential of the pandemic to dampen aggregate demand,” said Diokno.