Inflation this month likely breached the government’s two to four percent target according to Bangko Sentral ng Pilipinas Governor Benjamin Diokno.
Diokno said inflation likely quickened to a range of 4.2 to five percent in April after accelerating to a six-month high of four percent in March from three percent in February.
“Higher electricity rates in Meralco-serviced areas, increased domestic petroleum prices as well as higher meat and fish prices are the primary sources of inflationary pressures during the month. Inflation pressures will also emanate from positive base effects,” Diokno said.
The BSP chief pointed out that lower prices of fruits and vegetables and the broadly stable peso likely offset the upward price pressures.
Inflation averaged 3.4 percent in the first quarter of the year after hitting a six month high of four percent in March from three percent in February amid soaring global oil prices due to Russia’s invasion of Ukraine.
“Looking ahead, the BSP will continue to monitor emerging price developments and possible second-round effects to help achieve its primary mandate of price stability that is conducive to balanced and sustainable growth of the economy,” Diokno said.
The central bank expects inflation to remain elevated and breach the BSP’s two to four percent target starting the second half of the year before easing back to within the target range by the first quarter of next year.
It sees inflation averaging 4.3 instead of 3.7 percent for this year and to 3.6 instead of 3.3 percent next year based on its assessment last March 24.
The BSP is likely to raise interest rates as early as June this year after a cumulative aggressive 200 basis points rate cuts in 2020 that brought the benchmark rate to an all-time low of two percent as part of its COVID-19 response measures.