BSP: Inflation may return to target levels in December

Ramon Royandoyan –

December 29, 2021 | 3:16pm


MANILA, Philippines — Inflation could potentially return to the government’s target in the final month of 2021, but steeper power rates and an uptick in food costs likely exerted some upward price pressures, the Bangko Sentral ng Pilipinas said.

In a statement on Wednesday, the central bank said inflation, as measured by the consumer price index, would likely settle within the 3.5-4.3% range in December.

If the low-end of the BSP’s forecast range is realized, inflation would further ease from 4.1% clip recorded in the previous month. It would also settle within the central bank’s 2-4% target.

To recall, energy costs rose in December, with Meralco, the largest power distributor in the country, blaming stubbornly high generation charges for the more expensive electricity this month.

Food prices, on the other hand, often increase in the run-up to the holiday season, when consumption is typically strong. However, the aftermath of typhoon “Odette” may elevate food prices in affected areas, mostly in central and southern Philippines.

But the BSP said these increases could be offset by price rollbacks in petroleum products and the appreciation of the peso, which could lower import costs for the country.

For this year, the Duterte administration forecasts inflation to land between 4.3-4.5%, breaching its 2-4% annual target.

“Looking ahead, the BSP will continue to monitor emerging price developments to help achieve its primary mandate of price stability that is conducive to balanced and sustainable economic growth of the economy,” the BSP said.

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