BSP: Consumer prices to rise faster than expected in last six months of 2022

Philippine consumer prices are expected to go up more than expected in the last six months of the year given movements in global prices, the Bangko Sentral ng Pilipinas (BSP) said Tuesday.

According to BSP Governor Benjamin Diokno, inflation is seen to settle above the 2% to 4% target range in the second half due to elevated global oil and non-oil prices and positive base effects.

“The rise in global crude oil price pressures brought about by the ongoing Russia-Ukraine conflict have contributed to the increase in energy-related prices,” he told reporters in a virtual briefing.

Domestic pump prices have been on an uptrend in 12 out of the past 14 weeks, which the Department of Energy (DOE) has repeatedly attributed to the ongoing conflict between Russia and Ukraine that has hit global supplies and driven global prices higher.

“At present, we have not seen clear signs of second-round effects in terms of actual changes in transport fares or wages,” Diokno said.

The Land Transportation Franchising and Regulatory Board (LTFRB) last month rejected petitions of transport groups to increase the minimum jeepney fare by P1, which came after successive increases in prices. It maintained the minimum fare at P9 for the first four kilometers.

The Regional Tripartite Wages and Productivity Board (RTWPB) also dismissed the petition of the Trade Union Congress of the Philippines (TUCP) seeking an across-the-board minimum wage increase of P470 a day in Metro Manila.

“We are aware that inflation is likely to remain elevated in the coming months due mainly to domestic and global supply-side pressures. Inflation expectations have likewise risen but they continue to be anchored to the 2% to 4% target band,” Diokno said.

The BSP expects inflation to average 4.3% this year, reflecting the impact of higher global commodity prices, before slowing to the target band within the first quarter of 2023.

“The BSP is prepared to act as necessary should we see stronger indications of second-round effects such as when they are already broad-based price pressures, and inflation expectations become disanchored,” Diokno said.

The BSP has maintained that monetary policy — currently at record lows — will remain data-dependent moving forward. —VBL, GMA News