BANGKO Sentral ng Pilipinas Governor Amando Tetangco Jr. said inflation in February likely accelerated to as high as 3.9 percent from 2.7 percent in January due to higher jeepney fares, fuel prices and electricity rates.
“The BSP forecast suggests that February inflation could settle within the 3.1 to 3.9 percent range. The increase in domestic petroleum prices, jeepney and taxi fares, and electricity rates of Meralco-serviced areas could exert upside pressures to inflation during the month,” Tetangco said in a text message to reporters on Monday.
He said the uptick in the projected inflation was seen to be temporary as upside pressures were largely supply-side in nature.
“Moving forward, the BSP will continue to monitor closely emerging price conditions to ensure price stability conducive to a balanced and sustainable economic growth,” he said.
Government data show that the last time inflation rate breached the 3-percent level was in November 2014 at 3.7 percent.
Early this month, the Land Transportation Franchising and Regulatory Board approved a P1 increase on minimum fares in public utility jeepneys operating in Metro Manila, Central Luzon and Southern Tagalog. LTFRB also approved a separate petition to revert the taxi base fare back to P40 in Metro Manila, Cebu and Panay.
Also in February 2017, power distributor Manila Electric Co. increased its power rates by P0.92 per kilowatt-hour due mainly to a higher generation charge.
Inflation in December settled at 2.6 percent, bringing the 2016 average to 1.8 percent, way below the target range of 2 to 4 percent for the year. However, consumer prices accelerated to a two-year high of 2.7 percent in January 2017 due to higher increments in clothing and footwear, health and transport. It was the fastest since the 2.7 percent in December 2014.
The Monetary Board of Bangko Sentral ng Pilipinas during the first policy meeting for the year kept the benchmark interest rates steady due to the manageable inflation environment and strong economic growth prospects. The interest rates of 3.5 percent for overnight lending, 3 percent for overnight borrowing and 2.5 percent for overnight deposits were left unchanged. The reserve requirement ratios were likewise maintained.
Bangko Sentral Deputy Governor Nestor Espenilla Jr. earlier said the board’s decision was based on assessment of inflation dynamics and the risks to the inflation outlook over the policy horizon. He said while inflation had risen due to the recent increases in food and oil prices, latest baseline forecasts continued to indicate that the future inflation path would remain within the target range of 2 to 4 percent for 2017 to 2018.
But the board adjusted upward the inflation average target this year and next on higher oil prices, and depreciation of the peso, especially in the last quarter of 2016. The target for 2017 was increased to 3.5 percent from 3.3 percent made during the Dec. 22 meeting, while the 2018 target was slightly adjusted to 3.1 percent from 3 percent.
