Philippines sees inflation uptick in December


MANILA: Prices of goods and services are expected to have risen at a faster clip in December on the back of seasonal factors as well as higher commodity prices, according to the country’s central bank.

In a statement, Bangko Sentral ng Pilipinas (BSP) governor Benjamin Diokno said the monetary planner’s economists expected the official inflation rate for the last month of 2020 to settle within the 2.9%-3.7% range.

This is potentially higher than the November inflation rate of 3.3%, which exceeded the central bank’s previous forecast range of 2.4%-3.2% – a phenomenon authorities described as “transitory.”

“Higher prices of domestic petroleum products and key agricultural items contributed to upward price pressures during the month, ” the BSP chief said, adding that these factors could be partly offset by the downward adjustment in electricity rates in Meralco-serviced areas, along with slightly lower rice prices and the continued appreciation of the peso.

“Looking ahead, the BSP will continue to monitor economic and financial developments to ensure that its primary mandate of price stability is conducive to balanced and sustainable economic growth is achieved, ” Diokno said.

Earlier this month, the central bank chief said that the average inflation rate was still expected to settle within the government’s target range of 3%, plus or minus 1 percentage point, for 2020-2022, as the impact of supply disruptions due to recent typhoons was expected to be largely transitory.

As this developed, the central bank said “downside risks” to the global and domestic economy remained despite recent progress in developing vaccines for Covid-19.

“Logistical challenges in the distribution of the vaccine would have to be addressed before the recovery could resume, ” Diokno said. “In the near term, uncertainty remains high following the resurgence of the virus in the US, Europe and parts of Asia.”

He warned that the reimposition of lockdowns could further dampen economic recovery.

Last month, the central bank implemented a surprise 25-basis-point rate cut, lowering its key interest rate further to an all-time low of 2%.

With the spike in the November inflation rate, the resulting negative real interest rate now stands at 1.3%, representing the net erosion in the peso’s purchasing power.

Diokno had also called for more fiscal spending programmes to take advantage of the cheap cost of funds in the local financial system amid emerging data that banks continued to avoid risky lending activities and borrowers continued to shy away from loans – activities that could help restore economic growth.

Nonetheless, he stressed that monetary authorities were prepared to do more going forward. — The Philippine Daily Inquirer/ANN

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3
   

Did you find this article insightful?

Yes
No

Next In Business News

Tealive to venture into Cambodia
Genting Malaysia cuts pay again as Covid shuts local casino
Tabung Haji financially stable, targets stable profit distribution
Paramount urges govt to speed up development approvals
Malaysia’s exports of rubber products jump to nearly RM41b in 2020
Glove stocks make strong rebound ahead of earnings results
Income tax breaks for 2020
AmInvest Research retains overweight on oil and gas stocks
AmBank has enough capital to absorb settlement
UOB Kay Hian has technical buy on Leong Hup

Stories You'll Enjoy


Vouchers