MANILA - Continued social protection efforts and supply-side management are among the government measures that can cushion the impact of Russia's invasion of Ukraine to the country's inflation and economic recovery, the central bank said Friday
Global crude oil prices skyrocketed since Russian President Vladimir Putin ordered military operations targetting Kyiv and other major cities in Ukraine.
This week, gasoline prices in the Philippines rose by as much as P3 while diesel prices increased by as much as P5, after global benchmarks Brent crude, WTI and Dubai crude soared to above $100 per barrel.
Wheat prices followed since Russia and Ukraine are major importers of the commodity which is milled into flour.
Social protection measures "could help alleviate the impact of rising crude oil prices" on the transportation and agriculture sector, the BSP said in a statement.
The government has also approved a P3 billion fuel subsidy and other discounts as drivers and farmers reel from the impact of soaring oil prices.
Meanwhile, sustaining efforts to ensure adequate domestic food supply could mitigate the supply-side pressure on inflation, it added.
Further efforts to facilitate "further relaxation" of mobility restrictions could also boost economic recovery, the BSP said.
Metro Manila and other areas are under Alert Level 1 until March 15 while experts are exploring the possibility of easing further to Alert Level 0.
The Russia - Ukraine crisis could also create uncertainty on global trade and investments, financial markets and market confidence, the BSP said.
"In this regard, the BSP supports the National Government’s initiatives to implement appropriate fiscal interventions to cushion the economy from increased upside risks to inflation and to safeguard the momentum of economic recovery," it said.
"The BSP remains vigilant over the possible implications of the unfolding Ukraine-Russia conflict on the Philippine economy," it added.
BSP Governor Benjamin Diokno said inflation could be "elevated" in the coming months due to geopolitical risks, just after it settled back within target in January and February 2022.
The BSP has kept the country's benchmark interest rate to its record low of 2 percent since November 2020 to support economic recovery.
It earlier said it was waiting for the right conditions to unwind stimulus placed during the pandemic.
The BSP said it is committed to supporting economic recovery but at the same time it "stands ready to respond to potential second-round effects arising from elevated inflation pressures that can disanchor inflation expectations."
Given the circumstances, the BSP "must" hike interest rate in the second quarter to rein in inflation concerns, ING Philippines senior economist Nicholas Mapa earlier said.