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PHILIPPINE inflation may accelerate this month on higher
oil and food prices, central bank Governor Amando
Tetangco said
Monday.
“We
expect some slight upward bias in inflation,” Tetangco
said in a mobile phone message.
“Overall, the inflation environment continues to be
favorable.”
The
inflation rate this month may be between 2.1 percent and
2.8 percent from a year ago, Tetangco said in a mobile
text message. The bottom end of the range would be the
slowest pace in 20 years, while the top end would mark
the second acceleration in prices in as many
months.
Gains in
the peso against the dollar have restrained inflation by
holding down import costs, while “cautious monetary
policy” has also curbed price increases, he
said.
Consumer
prices rose 2.3 percent in April, the first acceleration
in 12 months, increasing from a seven-year low of 2.2
percent in March.
Many in
the Cabinet economic cluster anticipate the inflation
rate to inch up over the short horizon, in part because
the base effect of the higher value-added tax rate of 12
percent appeared to have already tapered off.
But oil
prices during the month have also been higher, according
to Tetangco.
“Supply
conditions in some areas were a little less favorable
because of the dry spell. They were, of course,
cushioned by the strong peso, cheap imports and the
generally cautious monetary policy,” he said.
Still,
he said the overall inflation environment “continues to
be favorable” or one where the average for the year
should fall within the 4-percent to 5- percent range
forecast for the period.
Such
optimism, economists and observers noted, is a broad
hint at the posture of the monetary board, the
policymaking body of the BSP, when it meets on Thursday
and decides what to do with its policy rates.
Some
said now was the time to make some adjustments to the
rate at which the BSP borrows from or lends to the banks
on overnight bases, currently set at 7.5 percent and
9.75 percent, respectively.
The BSP
has kept these rates unchanged since October 2005 even
though it subsequently adopted a tiered interest rate
approach to bank funds that are brought to it also for
overnight safekeeping, effectively relaxing their
monetary stance.
--Bloomberg, J. Vallecera |
