The Bangko Sentral ng Pilipinas (BSP) is still confident that the consumer price index (CPI) will be below four percent by October this year, despite only having a minuscule reduction in inflation for February.
The BSP had previously warned that inflation’s above-the-target level of two percent to four percent could last until December 2023, after January’s inflation hit 8.7 percent versus 8.1 percent in December 2022.
However, after the government released a lower February CPI of 8.6 percent on March 7, the BSP said negative base effects will keep their estimate that inflation will be around 3.8 percent in the fourth quarter on point.
The inflation path continues to be driven by supply-side factors as pressures from elevated global and domestic commodity prices broaden, according to the BSP.
The BSP’s full-year inflation forecast is an average of 6.1 percent inflation for 2023 and 3.1 percent next year.
The risks to the inflation outlook are still tilted to the upside for this year and in 2024, the central bank added.
The Monetary Board is scheduled to hold its next policy-setting meeting on March 23.
The BSP remains prepared to adjust its monetary policy settings as necessary to prevent inflation expectations from becoming disanchored and safeguard the inflation target over the policy horizon.