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September 26, 2022

Below-consensus inflation surprises market

Inflation, or the rate of change in prices, proved unchanged in the February survey at 3 percent, according to the Philippine Statistics Authority.

The outturn surprised the market which anticipated the number to rise higher.

But the Bangko Sentral ng Pilipinas (BSP) quickly doused whatever sentiment the PSA report generated, saying the below-consensus outturn was well within its 2.8 percent to 3.6 percent forecast.

“The February 2022 inflation of 3 percent is within the BSP’s forecast range of 2.8 to 3.6 percent.

“Inflation is seen to accelerate over the near term due to higher oil prices as well as the impact of positive base effects. Nonetheless, the BSP’s full-year inflation forecasts continue to show that inflation would average within the 2-4 percent target range for 2022-2023 as government direct measures help address the supply constraints,” it said.

According to the BSP, the recent rise in crude oil prices was due to geopolitical tensions that as consequence raised the air of local as well as global macroeconomic uncertainty over the short horizon.

“Under these circumstances, the BSP will continue to closely monitor the emerging risks to the outlook for inflation and remain vigilant against possible second-round effects from supply-side pressures or any shifts in the public’s inflation expectations. The BSP supports the implementation of non-monetary measures by the national government to help mitigate the impact of higher oil prices and avoid the broadening of price pressures. On the part of the BSP, it continues to have a wide arsenal of policy instruments to respond to possible adverse impact of this external shock.

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