ASEAN KEY DESTINATIONS
Philippines' inflation may be peaking
BSP Governor Amando Tetangco Jr. said this month's inflation rate may settle at a range of 4.5 percent to 5.5 percent. Monetary authorities project inflation for this year and next year at 4 percent to 5 percent.
The BSP chief attributed the higher forecast to the remaining taxi fare adjustments, seasonal increases in school supplies as well as the impact of fuel subsidies for jeepney and tricycle operators, among others.
"We have recently seen some easing in the price of oil in the international market, but there continue to be risks of volatilities in this market. Other risks to the forecast include possible supply disruptions that are weather-related," Tetangco said in a text message to reporters.
He said these could be mitigated by stable exchange rates.
"The BSP will continue to monitor developments to ensure that our stance for monetary policy remains appropriate," Tetangco said. Deputy Gov. Diwa Guinigundo said that inflation "may be beginning to peak." "We're seeing it to peak in the second quarter or shortly after, then taper off," he said. For the full year, average inflation may still fall within the 3 percent to 5 percent forecast, he added.
Analysts expect price movements for the full year to settle at 5.9 percent, taking into consideration the problems in the Middle East and North Africa region, and their impact on oil and remittances from overseas Filipino workers.
They said the global inflationary impact of massive reconstruction in Japan and the potential impact of food inflation caused by the nuclear fallout may also contribute to the upward path of inflation.
Early this month, monetary authorities raised policy rates by another 25 basis points-the second for the year-bringing the overnight borrowing to 4.5 percent and the overnight lending to 6.5 percent.
The BSP had said that the preemptive response would minimize the overall impact of rising prices on domestic economic activity by firmly anchoring inflation expectations.
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