BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin Diokno believes inflation will start showing signs of slowing down in June this year as prices of key food items trended down during the month.
In a message to reporters on Wednesday, the BSP chief said inflation likely hit 4.3 percent in June, with a projection band of 3.9 percent to 4.7 percent.
Diokno’s projection for the month is a slight deceleration from the 4.5-percent inflation print in March, April and May for this year. It is still, however, above the ceiling of the annual government target range of 2 to 4 percent.
According to the BSP governor, higher prices of domestic petroleum products, along with the upward
adjustment in Meralco electricity rates and a slightly weaker peso, continue to put upward pressures on the price basket during the month.
However, these could be partially offset by the decline in prices of key food items such as rice, meat and fruits due to improved supply conditions.
“Moving forward, the BSP will continue to monitor emerging price developments to ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” Diokno said.
In the latest monetary policy meeting, the BSP raised its average inflation forecast for the year.
BSP Deputy Governor Francisco Dakila Jr. said inflation is now likely to average at 4 percent for this year, up from the 3.9-percent forecast in their previous meeting. For next year up until 2022, Dakila said inflation is expected to hit an annual average of 3 percent.
The BSP said in their June 24 monetary policy meeting that the continued implementation of direct non-monetary measures will be “crucial” in mitigating further supply-side pressures on meat prices and inflation.
“The risks to the inflation outlook remain broadly balanced around the baseline projection path. The uptick in international commodity prices amid supply-chain bottlenecks and the recovery in global demand could lend upside pressures on inflation,” Diokno earlier said.
“However, downside risks to the inflation outlook continue to emanate from the emergence of new coronavirus variants, which could delay the easing of containment measures and temper prospects for domestic growth,” he added.