By Joan Santiago
The Bangko Sentral ng Pilipinas (BSP) expects a hike in the inflation rate for August 2012 due to the combined impact of the monsoon floods, higher utility rates and peso weakening but stressed that full-year outlook still points to manageable inflation.
BSP Governor Amando Tetangco Jr., in a text message to reporters Tuesday, said rate of price increases for this month is projected to stay within 2.9-3.8 percent.
He explained that “our expectation is that, as in the past, price increases in selected vegetables and fish as a result of supply disruptions from natural calamities would be temporary.â€
“Our assessment continues to be that average inflation for 2012 and 2013 would fall within the lower half of our target range over the policy horizon of three to five percent,†he said.
Inflation last July registered an uptick to 3.2 percent from month-ago’s 2.8 percent on account of higher inflation rate in all commodity groups except for clothing and footwear, health, transport, and education indices.
This brought to 3.1 percent the average inflation rate in the first seven months of the year.
Tetangco said monetary officials “will remain mindful of aggregate global demand developments, possible price pressures from volatilities in commodity prices, and the impact of shifts in capital flows on asset prices and the exchange rage.â€
“We will make adjustments to policy stance and adopt prudential measures, as appropriate, to ensure that our inflation target is protected,†he added.
The central bank does not foresee inflation exceeding the three to five percent target until 2014 with the average inflation rate eyed to stay at the lower end of the target range.
This outlook enabled central bank’s policy-making Monetary Board (MB) to further cut the BSP’s policy rates to record-low level last July 26 to provide additional buffer against negative global developments.
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