BSP: July inflation to stay above 5.0%
INFLATION likely remained above 5.0 percent in July, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday, either dipping to 5.1 percent from June’s five-year high of 5.2 percent or accelerating further to 5.8 percent.
“The BSP Department of Economic Research projects July 2018 inflation to fall within the 5.1- 5.8 percent range,” the central bank said in a statement.
“The increases in electricity rates in Meralco-serviced areas, water rate adjustments in Maynilad- and Manila Water-serviced areas, domestic gasoline and LPG (liquefied petroleum gas) prices, jeepney fares, scheduled increase of the tobacco excise tax, and prices of rice and other agricultural commodities could lead to upward price pressures during the month,” it added.
Consumer price growth has topped the BSP’s 2.0-4.0 target for the year since March, prompting monetary authorities to order two consecutive 25-basis point policy rate hikes in May and June.
These brought the central bank’s overnight borrowing, lending and deposit rates to 3.5 percent, 4.0 percent and 3.0 percent, respectively.
Official inflation data for July will be announced on August 7 and the results will be considered when the BSP’s policymaking Monetary Board meets two days later.
Last month, Manila Electric Co.’s per kilowatt-hour rate for households consuming 200 kWh per month increased by P0.3136. Manila Water Co. Inc. and Maynilad Water Services Inc. also increased their rates by P1.58 per cubic meter and P0.26 per cubic meter, respectively.
Oil companies, meanwhile, raised pump prices for gasoline and cooking gas, the most recent involving P1.15 per liter and P0.90 per kilogram adjustments, respectively. The minimum fare for public utility jeepneys also increased to P9 from P8.
The Bangko Sentral, however, noted that there was “a slight downward adjustment in domestic diesel prices for July.”
Rice prices, meanwhile, continued to increase as of the first week of the month, with the average wholesale price of well-milled grain up 0.22 percent from the previous week at P41.87 per kilo. Retail prices were also up 0.16 percent week on week at P44.69/kg.
Going forward, the BSP said it would “continue to keep a watchful eye on the risks to the inflation outlook and will take necessary action to help ensure that inflation expectations remain firmly anchored to the target.”
Economic managers earlier raised this year’s inflation forecast to 4.0-4.5 percent from 2.0-4.0 percent, higher than the BSP’s 2.0-4.0 percent goal, in recognition of latest developments.
The Bangko Sentral expects consumer price growth to peak in the third quarter, with the full-year average breaching its target, before returning to the 2.0-4.0 percent range in 2019.
During its last policy meeting, the Monetary Board trimmed its inflation forecasts for 2018 and 2019 to 4.5 percent and 3.3 percent, respectively, from 4.6 percent and 3.4 percent previously.
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