By Lee C. Chipongian
The Bangko Sentral ng Pilipinas (BSP) is projecting that June inflation could be a low of 1.9 percent or a high of 2.7 percent from May’s 2.1 percent.
BSP Governor Benjamin E. Diokno said there are price pressures in June that may have pulled inflation higher.
“Higher gasoline, diesel, and kerosene prices as well as the uptick in the price of rice due to supply bottlenecks contributed to positive price pressures during the month,” he said. This was the assessment of the BSP Department of Economic Research.
“These could be partly offset by slightly lower LPG price and electricity rate in Meralco-serviced areas,” added Diokno.
The BSP chief said that they will “continue to monitor evolving economic and financial conditions to ensure that the monetary policy stance remains consistent with the BSP’s price stability mandate.”
The BSP recently reduced the policy rate again by 50 basis points, citing benign inflation. Key rates have fallen by a cumulative 175 bps so far for this year in the hope of stimulating an economic recovery post-COVID-19 lockdowns.
In the same meeting, the BSP also recasts the 2020 inflation to 2.3 percent and 2.6 percent for 2021, higher than previous projections of 2.2 percent and 2.5 percent.
Diokno earlier said inflation may remain below the two-percent level in the next two quarters as the rate will “continue on its downward path” because of the recession – both local and globally — and low oil prices.
For the BSP, inflation has always been seen as settling below the midpoint of the government’s target range of two-four percentage point for 2020 and 2021.
Diokno also said that the domestic economy will expand in a U-shaped recovery path and that it is “expected to bounce back to its potential output growth in 2021 once the impact of the governments fiscal and monetary measures gain traction.”