Average 2018 Inflation to Rise Beyond 2-4% Target Range – Espenilla

Higher prices of fuel, sugar-sweetened beverages and tobacco as well as electricity rates are seen to push  2018 average inflation in the Philippines to rise beyond the government’s two to four percent target, Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said.

However, the central bank chief said impact of higher prices of some commodities this year is seen to be temporary and “inflation is expected to return to within target range in 2019, settling slightly above the midpoint of the target range.”

In a statement Tuesday, he explained that using the 2006-based CPI (consumer price index) series inflation is seen “to average above 4.0 percent in 2018, thus exceeding the high-end of the National Government’s target range of 3.0 percent ± 1.0 percentage point.”

He, on the other hand, pointed out that “the potential expansion of the economy’s productive capacity is expected to temper price pressures over the medium-term.”

“In addition, mitigating measures in the pipeline, such as unconditional cash transfers and transport subsidies, are expected to help prevent potential second-round effects from developing,” he said.

“Nevertheless, the BSP will remain watchful against signs of higher inflation becoming more broad-based and persistent to ensure that inflation expectations remain consistent with the target,” he added.

The Philippine Statistics Authority (PSA) has rebased the year for its inflation report from 2006 to 2012 although it has released two tables starting with the February figures.

Based on the 2006 base year, February 2018 inflation rose to 4.5 percent from month-ago’s four percent, bringing the average in the first two months to 4.2 percent.

Core inflation using that same base year ticked-up to 4.4 percent from the previous month’s 3.9 percent resulting in an average of 4.1 percent.

Using 2012 as base year, inflation last February registered a faster pace of 3.9 percent from 3.4 percent last January, resulting in an average of 3.7 percent in the first two months this year. February 2017 inflation is lower at 3.1 percent. (PNA)