THE Bangko Sentral ng Pilipinas (BSP) expects the country’s headline inflation to be within its target range as early as September, as the increase in prices of goods and services continues to ease.
“Our forecast is that by September or October, the headline inflation on a year-on-year basis will be below 4 percent unless there are new developments,” BSP Governor Felipe M. Medalla told reporters in an interview on Monday in Taguig City.
The national government’s inflation target is between 2 and 4 percent.
Medalla explained that the BSP has observed that headline inflation, on a month-on-month basis, has been stagnant or near zero since January.
“At least from one month to the next, inflation is now moving that much. Of course, that will be the temporary effect of already high prices, but once that is gone, it will normalize,” he said
Medalla said the government’s anti-inflation measures, which involved monetary and non-monetary actions, are already working, as exemplified by the downward trend in the country’s inflation rate.
Medalla added that the BSP sees no more lingering supply shocks that could impact the prices of goods in the country.
“The decision of the government to relax the importation of goods with short supply contributed to that plus the fact that our higher policy rates also began to work,” he said.
Without disclosing exact figures or range, the Central Bank governor said the inflation rate for May would be “significantly” lower on a year-on-year basis because of base effects. The country’s headline inflation in May 2022 was at 5.4 percent.
The country’s inflation rate in April was at 6.6 percent, the lowest in four months and the third consecutive month that inflation was on a downward trend since the 8.7 percent in January.
Medalla also disclosed that the BSP foresees headline inflation in January next year to be below 2 percent because of base effects.
The country’s improving inflation situation encouraged the BSP last month to pause its aggressive monetary policy tightening campaign. (Related story: https://businessmirror.com.ph/2023/05/19/bsp-pauses-interest-rate-hikes-as-inflation-cools-and-consumer-demand-eases/)
The BSP earlier said it expects inflation to average 5.5 percent this year, lower than the February estimate of 6.1 percent.
The increase in commodity prices is also expected to average 2.8 percent in 2024, slower than the 3.1 percent estimate made in the last monetary policy report.