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Manila Bulletin devider Business devider Banking & Finance devider BSP forecasts 3.2%-4% August inflation

BSP forecasts 3.2%-4% August inflation

Published Aug 30, 2024 07:37 am

The Bangko Sentral ng Pilipinas (BSP) is projecting a lower inflation for August of 3.2 percent to four percent versus the actual July rate of 4.4 percent despite continued price pressures that are somewhat tamed by a stronger peso.

In a statement Friday, Aug. 30, the BSP forecasts inflation will stay within the target range of two percent to four percent for the month of August.

It noted that due to bad weather conditions this month, it led to higher electricity rates as well as higher prices of some agricultural commodities. These are the “primary sources of upward price pressures” for the August consumer price index (CPI).

However, in projecting a low of 3.2 percent inflation for August or any rate below four percent, the BSP said the notable higher prices could be offset by lower domestic oil prices and the reduced prices of rice, fish, and meat. The stronger peso vis-à-vis the US dollar is also a factor in a lower August CPI.

The BSP reiterated that the Monetary Board "will continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment.”

The government will announce the August CPI on Sept. 5.

The Monetary Board, BSP’s policy-making arm, has two more policy meetings left for this year. The next one is on Oct. 17 and the last will be on Dec. 19.

In the most recent policy meeting which was last Aug. 16, the BSP cut the target reverse repurchase (RRP) or policy rate by 25 basis points (bps) to 6.25 percent. This was the beginning of the easing cycle since the last rate cut on Nov. 19, 2020.

Meanwhile, the BSP said that inflation is projected to continue with its downward path and return to within the government’s two to four percent target range despite the uptick in July.

The latest BSP risk-adjusted inflation forecasts for 2024 is 3.3 percent and 2.9 percent for 2025. For 2026, the forecast is 3.3 percent.

The BSP had anticipated that CPI will be above-the-target until July as constraints to domestic supply added pressures on the prices of key food items such as rice and corn while noting positive base effects from the decline in the food and energy inflation in the same period last year.

After July, the BSP said inflation is projected to return to within the target range as pressures on food and crude oil prices start to ease.

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