The Philippines’ inflation rate is seen to continue its rise towards the upper end of the central bank’s 2 percent to 4 percent target range until the third quarter of the year.
”A closer scrutiny of the monthly inflation path will show that inflation imprints will be rising until sometime in the third quarter of 2017. And the monthly rates are expected to be very close to the upper band of the target range,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said in his speech during the Management Association of the Philippines (MAP) economic briefing 2017 and general membership meeting held in Makati Shangri-La Tuesday.
The central bank chief however assured MAP members that full-year average inflation rates for 2017 and 2018 are projected to remain within target.
“Even so, our forecast path suggests that monthly inflation will slow down thereafter, resulting in within-target full-year averages over the policy horizon for the next two years,” he said.
Inflation has continued its rise since the second half of 2016 due to the normalization of oil prices in the international market.
Rate of price increases went back to within-target levels starting in September 2016 after it rose to 2.3 percent from month-ago’s 1.8 percent as oil prices continued to go up, after falling below target levels since May 2016.
In the first two months this year, the rate of price increases averaged 3 percent, the middle of the target range.
Inflation last February alone rose to 3.3 percent from month-ago’s 2.7 percent due to faster increases in the prices of heavily weighted food and non-alcoholic beverages.
The central bank forecasts March 2017 inflation to stay within 3 percent and 3.8 percent.
Last week, the central bank’s policy-making Monetary Board (MB) cut the BSP’s average inflation forecast for this year and next on account of slower growth of domestic liquidity and lower prices of oil in the international market.
The new forecast for this year is 3.4 percent, from 3.5 percent set during the board’s meeting last February, while projection for next year is currently at 3 percent from 3.1 percent.