MANILA: Higher domestic fuel and electricity prices are seen as upside risks to the country’s April 2019 inflation, which is projected to stay between 2.7-3.5 percent.
“However, these pressures may be partly offset by the continued decline in rice prices and by the peso appreciation,” the Bangko Sentral ng Pilipinas (BSP) said in a statement Tuesday.
“Moving forward, the BSP will continue to closely monitor evolving price trends and will undertake necessary measures towards its commitment to price stability,” it added.
The rate of price increases has been on the downtrend after peaking at 6.7 percent in September to October 2018.
Last March, it decelerated to 3.3 percent from month-ago’s 3.8 percent, bringing the average rate in the first quarter this year to 3.8 percent.
Monetary officials forecast this year’s inflation to average at 3 percent, the middle of the 2 to 4 percent target band until 2022.
Meanwhile, ING Bank Manila senior economist Nicholas Mapa forecasts inflation this month at 3 percent.
In a research note, the economist said rice prices, which has a 9 percent weight on Philippines’ consumer price index (CPI), has declined, with the year-on-year change in the price of regular milled rice down by 0.90 percent.
With this development, “we can expect headline inflation to remain subdued,” he said.
Mapa, however, noted that utility rates have increased.
Mapa said inflation has been declining amid the 31.6 percent year-to-date uptick in price of Dubai crude oil and the 24.6 percent rise in domestic diesel prices.
He said both the inflation forecasts and expectations point to within target inflation rate in the next two years.
“Given BSP Governor (Benjamin) Diokno’s recent remarks hinting at a rate cut (and RRR reduction) within the year, we expect that we are getting closer to the central bank finally reversing its ultra-aggressive stance of yesteryear,” he added. (PNA)