BSP KEEPS ’22 INFLATION TARGET ... FOR NOW

The Bangko Sentral ng Pilipinas (BSP) is keen on keeping its prepandemic target range of 2 to 4 percent for inflation in 2022, even with oil and food prices expected to go up with more robust local and global economic activity.

Government economic managers through the Development Budget Coordination Committee (DBCC) set a goal of herding inflation to 3 percent plus or minus one percentage point—which means a range of 2 to 4 percent—for the years 2019 through 2022.

Stable inflation engenders favorable economic development as stability allows business entities to predict interest rates.

Last year, however, the target was missed.

In an open letter to the President Duterte, the BSP said that inflation went beyond the upper end of the target mainly due to insufficient supply of key food items such as pork as well as rising energy prices, particularly crude oil.

Last year, the continuing impact of an outbreak of African swine fever—which has been sweeping across Asia since 2018—significantly reduced domestic hog production and helped heat up growth in prices of meat to double digits.

Also, last year’s spells of international crude oil price rallies nudged up domestic pump prices of diesel by P15.80 per liter, of gasoline by P16.20 and of kerosene by P11.50.

Still, the BSP said its forecasts suggest that inflation would go back toward the target range this year and in 2023.

“Inflation expectations have also remained firmly anchored to the target band, based on the BSP’s surveys of private sector economists and analysts,” the regulator said.