Bangko Sentral ng Pilipinas Governor Benjamin Diokno said inflation in May likely slowed to 4.4 percent from 4.5 percent a month ago, due mainly to lower food prices for the month.
Diokno said in a statement Monday the BSP’s inflation projection for May was 4.4 percent.
“The BSP projects May 2021 inflation to settle within the range of 4.0–4.8 percent. Higher prices of meat and domestic petroleum products along with the upward adjustment in Meralco electricity rates are the main sources of upward price pressures for the month,” Diokno said.
“These could be offset by the decline in prices of key food items, such as rice, vegetables, and fish, due to improved supply conditions, along with the appreciation of the peso,” he said.
He said the BSP would remain watchful of economic and financial developments going forward to ensure the monetary policy stance remains consistent with the BSP’s price stability mandate.
The manageable inflation outlook compelled the Monetary Board to keep the record-low benchmark interest rate of 2 percent during the May 12 policy meeting. The interest rates on the overnight deposit and lending facilities were also kept at 1.5 percent and 2.5 percent, respectively.
Latest inflation forecasts indicate that inflation is likely to settle within the target range of 2-4 percent in 2021 and 2022
Diokno said inflation was now projected to track a slightly lower path in 2021 to average near the upper end of the target band. He noted that price pressures on food commodities were abating with improved weather conditions, the impact of Executive Orders No. 128 and 133, s. 2021, and the implementation of direct non-monetary interventions to alleviate supply constraints.
The board also adjusted the inflation forecasts for 2021 and 2022, taking into account a number of factors. The forecast for 2021 was lowered to 3.9 percent from 4.2 percent made in the March 2021 meeting. For 2022, the forecast was slightly raised to 3 percent from 2.8 percent previously.
For 2021, the adjustment took into account the lower inflation for March and April, the appreciation of the peso, and the gross domestic product data in the first quarter. GDP posted a lesser decline of 4.2 percent in the first quarter 2021 compared to -8.3 percent a quarter ago.
For 2022 inflation adjustment, the factors considered are the higher global crude oil prices and favorable growth prospects next year.
Inflation in April remained at 4.5 percent, the same rate a month ago, due to lower prices of food and nonalcoholic beverages. It was significantly faster than the 2.2 percent a year ago.
The figure brought inflation in the first four months to 4.5 percent, pr over the target range of 2-4 percent earlier set by the government. Diokno earlier said the uptick in inflation rate was transitory.