AFTER last year’s inflation fiasco, the Bangko Sentral ng Pilipinas (BSP) said it expects the growth of consumer prices to be relatively smooth sailing up until 2023.
The Central Bank on Wednesday issued a statement saying it is retaining its 2-percent to 4-percent target range up until 2023, on the assessment of a favorable supply and demand balance four years ahead.
“While price volatilities cannot be ruled out, inflationary impulses from international commodity prices are expected to remain modest. This expectation is supported by the current assessment of favorable demand-supply balance and lower pass-through to domestic inflation of exchange rate and international commodity price inflation,” the BSP said in a statement.
“Similarly, demand-induced price pressures are likely to remain manageable over the target horizon. Improved productive capacity of the domestic economy, fueled by higher infrastructure investments by the national government alongside the implementation of purposeful structural reforms, implies continued robust economic growth amid a low and stable inflation environment,” the Central Bank added.
The announcement of the inflation target is in line with the BSP’s commitment to transparency and accountability, as well as the forward-looking approach in the conduct of monetary policy.
The BSP last missed its target range in 2018 when inflation skyrocketed to 5.2 percent. Its target range for the year was also at 2 percent to 4 percent.
The rise in inflation during the year was largely due to unstable rice prices, which carry a large part of the consumer price index (CPI) basket for local consumers.
In a roundtable interview with the BusinessMirror on Wednesday, Monetary Board member Bruce Tolentino said they see rice prices being “more stable” in the coming years.
In 2019, the Monetary Board member noted that the farm-gate price of rice sank to its eight-year low due to the surge of rice imports as fueled by the opening up of the markets during the year.
Tolentino said by next year, both consumers and farmers will have adjusted to the reforms in rice markets and the programs under the rice tariffication law will be fully rolled out, thereby stabilizing prices down the line.
The BSP’s assessment also showed that a 2-percent to 4-percent inflation is “conducive to the balanced and sustainable growth of the Philippine economy.”