The Bangko Sentral ng Pilipinas (BSP) believes that rising inflation in the country will ease starting this month, due to the combined effects of the central bank’s tightening measures and the government interventions on supply side problems.
In a recent briefing, BSP Deputy Gov. for the Monetary Stability Sector Diwa C. Guinigundo said that it is possible that the country “may be seeing a more moderate inflation rate for September this year.”
“Because one, we will see the effects of the previous moves of the BSP. We would expect that, plus the interventions in the supply side, like more importation of rice to be delivered from now until the end of the year, plus addressing the problem of port congestion; and it looks like oil prices appear to be also coming down, so we should be able to see some moderation of inflation on the months ahead,” Guinigundo said.
The inflation rate of the country hit 4.9 percent in August this year, sustaining the same rate from the previous month. The August inflation rate is the highest acceleration for the country since 2011. It is also a contrast from the 2.1-percent inflation in August 2013.
This brought the country’s inflation rate average in the first eight months of the year at 4.4 percent—still within the government’s target range of 3 percent to 5 percent for this year.
The BSP governor will be announcing the central bank’s official forecast range of inflation for September at the end of the month. However, baseline forecasts show that the central bank assumes that inflation will end the year at an average of 4.5 percent, still slightly higher than the current average of 4.4 percent.
Guinigundo said that while monetary officials are looking forward to lower prices toward the end of the year, the assumptions of the effects of the combined effort of the central bank and the government to lower prices “takes time” to work its way.
“We need to be realistic in terms of our assumptions, and that is why the MB [Monetary Board] decided to do a dual increase in interest rates,” Guinigundo said.