The Philippines: BSP: Inflation has potential to climb to 5% in Mar 21

  • Inflation is likely to hit as much as 5% in Mar 21 even as signs are emerging that tight meat supplies responsible for the price uptick in recent months are abating, the central bank said on 31 Mar 21.
  • The official projection is pegged between 4.2% and 5% inflation for Mar 21, this time driven by higher oil prices and a weaker peso that made import costs more expensive. The official inflation report will be released 6 Apr 21, and anything above Feb 21’s 4.7% will mean a sixth straight month of acceleration.
  • More than that, a reading of 5% would also mean putting at risk central bank Deputy Governor Francisco Dakila Jr.’s forecast that average inflation for 2021 will not hit that level.
  • At the time the Bangko Sentral ng Pilipinas (BSP) decided to stay put on policy, Dakila said BSP does not expect inflation to venture to the 5% level— which had not been seen since the rice crisis in 2018.
  • “The BSP will continue to monitor evolving economic and financial conditions to ensure that the monetary policy stance remains consistent with the BSP’s price stability mandate,” the central bank said in a statement.
  • For the first 2 months of 2021, inflation has averaged 4.5% y/y, running above the BSP’s 2-4% target for 2021. The central bank expects it to remain above-target, albeit at a slightly lower 4.2% by 2021-end.

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