BANGKO Sentral ng Pilipinas is not considering changing its current inflation target of 2 percent to 4 percent to maintain the trajectory of the economic growth, Deputy Governor Diwa Guinigundo said Friday.
“I don’t think we need to change our targets because no matter how you measure inflation, no matter what base year you use, 2 to 4 percent inflation target makes sense given our stage of development as well as the inflation dynamics,” Guinigundo said in a briefing.
“If you lower it by one percent or two percent, you will tighten monetary policy and you will affect the trajectory of economic growth,” Guinigundo further said. “So 2 to 4 percent, we believe, continues to be appropriate,” he said.
Bangko Sentral earlier said inflation in February likely accelerated to as high as 4.8 percent from 4 percent a month ago due mainly to higher power rates and the impact of higher excise taxes on petroleum and sugar-sweetened products.
The Bangko Sentral’s Department of Economic Research projected the February 2018 inflation could settle within the 4.0 percent-to-4.8 percent range.
“Higher electricity rates and food prices, along with the full pass-through of higher excise taxes on petroleum products and sugar-sweetened beverages, could lead to upward price pressures for the month of February,” the DER said.
The Department of Finance said the implementation of Tax Reform for Acceleration and Inclusion law could potentially increase inflation by up to 0.7 percentage points in 2018 due to higher oil prices.
The DoF further said food prices might increase by up to 0.3 percentage points, and transportation by up to 0.1 percentage points.
But the DoF said the increase could be “very minimal and manageable—especially compared to the savings from lower income taxes.”
The government is scheduled to release early next week the February inflation report.
The Philippine Statistics Authority last week made 2012 as the base year to determine the consumer price index from 2006. The March CPI report, which will be released on March 6, will have 2012 as the base year, PSA said.
“The rebasing of the CPI from 2006 to 2012 is in consonance with the recommendation of the PSA Board… to reflect the latest composition of goods and services consumed and availed of by households across provinces of the country,” the agency said. Julito G. Rada
Data users will expect two sets of the CPI as the new series will be issued simultaneous with the 2006-based series until June 2018. The CPI series after July will be 2012-based. Julito G. Rada