People rush to buy goods at a market in Divisoria, Manila on August 5, 2021. George Calvelo, ABS-CBN News/File
MANILA—Inflation may remain elevated in the short term before settling within the government target of 2 to 4 percent, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Friday.
Inflation in 2021 could average 4.1 percent, higher than the previous forecast of 4 percent, the BSP said.
Higher global crude oil and non-oil commodity prices contributed to the higher inflation forecast, Diokno told reporters in a virtual briefing.
Dubai crude oil prices could remain elevated due to the recovery in global economic activity as well as a possible uptick in global commodity prices due to the strong demand and supply chain bottlenecks, he said.
But the upward risks are transitory, Diokno said.
"Oil prices could remain elevated in the coming months, but could be lower in 2022," he said.
Next year, inflation could settle at 3.1 percent on average, according to the BSP estimate.
However, recent data showed that wet markets around Metro Manila have seen spikes in prices of highland vegetables such as carrots and Baguio pechay.
The BSP said it would be ready to take action if needed and that it "supports direct supply-side measures to address the main source of supply constraints and bottlenecks.”
Diokno earlier said non-monetary measures helped ease supply-side woes such as the tariff reduction in pork meat imports as the African Swine Fever (ASF) caused a shortage in supply earlier this year.
The BSP earlier said it would keep its policy stance "accommodative" to support economic recovery.
On Thursday, the BSP kept the benchmark borrowing rate at 2 percent for 6 consecutive policy meetings.
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