Monetary Board Adjusts Average Inflation Forecasts

Average inflation forecasts for 2018-20 were raised after the Monetary Board (MB) took stock of more recent economic developments both here and abroad.

The Bangko Sentral ng Pilipinas (BSP) made this announcement alongside the additional raising of its key rates by an additional 25 basis points.

In a briefing Thursday, BSP Department of Economic Research (DER) Director Dennis Lapid said the 2018 forecast was hiked to 5.3 percent from 5.2 percent during the rate setting meet last September 27.

On the other hand, the 2019 figure was cut to 3.5 percent from 4.3 percent, while for 2020, to 3.3 percent from 3.2 percent.

During the same briefing, Deputy Governor Maria Almazara Cyd Tuaño-Amador attributed the change in forecasts to the impact of rice tariffication bill, which has been approved in both the House of Representatives and the Senate, and the announced suspension of the second phase of oil excise tax for 2019 amounting to PHP2 per liter.

She said the impact of the rice tariffication measure, which will still be deliberated in the Bicameral Conference Committee, “should be felt soon.”

She explained that the impact of rice tariffication “used to be part of the downside risk to inflation (but) now considered in the baseline inflation forecast for 2019.”

Officials of the Department of Finance (DOF) have proposed the implementation of rice tariffication in a bid to ensure enough supply of rice in the country.

The price of rice surged in the early part of 2018 due to supply issues, but this was addressed after the government implemented several measures such as the release of rice stocks from all warehouses of the National Food Authority (NFA).

On the suspension of the second oil excise tax hike for next year, Tuaño-Amador said this “comes with a considerable degree of certainty”, adding that this was also part of the downside risks of inflation but is now also a part of the baseline forecast.

This latest news, she said, “dampened the inflation forecast for that year.” (PNA)