MANILA - Average headline inflation eased in the second quarter, and inflation is expected to remain within the government’s target range despite rising prices of crude oil, the Bangko Sentral ng Pilipinas said on Thursday.
The BSP said headline inflation declined to an average of 4.3 percent in the second quarter from 4.5 percent in the first quarter.
While inflation remained above the government’s 2 to 4 percent target for the year, the BSP said food inflation was slower mainly due to the decline in the prices of rice, fruits, and vegetables. Meanwhile, non-food inflation rose as higher petroleum prices drove transport prices.
Despite this, BSP Deputy Governor Francisco Dakila Jr. said "inflation will remain within the target band of 3 percent plus and minus one percentage point even with elevated global oil prices.”
“Of course we will continue to update the analysis once new data becomes available."
Global oil prices breached $70 dollar per barrel amid rising demand and expectations that the economies are on the rebound after the disruptions of the COVID-19 pandemic.
Dakila noted that in its most recent meeting, the Development Budget Coordination Committee revised its outlook for global oil prices to $50 to $70 per barrel with inflation forecasts pegged at 4 percent for 2021 and 3 percent in 2022 and 2023.
"So that means that we are expecting that inflation target band to be achieved," Dakila noted.
Dakila also said, he doesn't believe the recent typhoons and inclement weather will stoke inflationary pressures. But he also said that timely supply-side measures from the government are important to keep prices in check.
In its second-quarter inflation report, the BSP also noted that the overall pace of recovery remains tentative amid the continued threat of COVID-19.
“In this regard, the continued implementation of targeted fiscal initiatives as well as the acceleration of the Government’s vaccination program should facilitate the gradual reopening of the economy and thus strengthen market confidence,” the BSP said.
It added that given these considerations, monetary policy stance will need to remain accommodative for as long as necessary in order to ensure the recovery of the economy.
- With a report from Bruce Rodriguez, ABS-CBN News