BANGKO Sentral ng Pilipinas Governor Nestor Espenilla Jr. said inflation will remain manageable in the coming months despite the developments in both domestic and external fronts that may present risks to the path of consumer prices.
“Our latest forecast show that inflation will continue to track the midpoint of target range in 2017 to 2019 (of 2 to 4 percent). However, the inflation path has also shifted higher due to recent increases in crude prices and the depreciation of the peso,” Espenilla said in a briefing on the third-quarter inflation.
Espenilla said the inflation outlook might still adjust upward owing in part to possible adjustment in electricity rates as well as the potential short-term impact of the government’s planned tax reform.
“Such developments, however, are not expected to breach the inflation target. Moreover, lingering uncertainty in global economic conditions may still temper further the inflationary pressures,” Espenilla said.
Data showed that inflation averaged 3.1 percent in the third quarter, unchanged from the quarter ago level but higher than the 2 percent average in the same period last year.
This brought the average since the start of the year to 3.1 percent, slightly higher than the midpoint of the target range of 2 to 4 percent.
Food inflation eased with slower increases in the prices of rice, meat, and fruits and vegetables. By contrast, non-food inflation rose due to the uptick in transportation fares and domestic fuel prices.
Espenilla said prospects for global economic growth had improved further since July this year. He said indicators of activity suggested a firmer recovery across advanced and emerging economies alike driven by improved investment and trade flows, solid industrial production and stronger business and consumer confidence. Julito G. Rada
“Nevertheless, global price pressures are expected to remain subdued even as we now see a higher path for international oil prices. We anticipate commodity prices to remain broadly stable in the coming months,” Espenilla said.
Against this backdrop, Espenilla said monetary authorities would remain watchful over potential forces that could dampen the global growth momentum that could spill over to the Philippine economy.
He said the anticipated normalization of monetary policy stance of central banks in advanced economies proceeding at various speeds introduced some degree of uncertainty.
“As the US economy continues to gain traction, the US Federal Reserve has started to unwind its bond purchases and it’s widely expected that they will raise interest rates anew before the year ends. Meanwhile, stronger growth across Europe has also prompted the European Central Bank to ponder how to taper its asset purchases as early as 2018,” he said.