The central bank still expects inflation to average within its target ranges for 2014 and 2015, but it warned that consumer prices may see some blips, or sharp fluctuations, during the period amid supply constraints.
“Our view is that within the policy horizon, inflation is likely to stay within the target range of 3 percent to 5 percent this year and 2 percent to 5 percent next year,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. told reporters.
“There could be blips up and down in the inflation [rate]but overall, on average, we believe that the average will still be within the target,” he said.
Tetangco made the statement on the sidelines of the launching of the Quezon City Credit Surety Fund held at the BSP Complex on Monday.
The Bangko Sentral governor noted that based on the latest estimates, the average inflation rate for 2014 and 2015 will be within the target range but there could be price pressures coming from the supply side.
One factor he singled out was the current problem of port congestion at the Port of Manila, which has created supply constraints and rising prices. He said that due to port congestion “there could be temporary tightness in supply. If there’s tightness, there’s some effect on prices also. We start to quantify what is the extent of that.”
Last week, Tetangco said the central bank will continue to coordinate with other agencies of government to address pressures from the supply side, including the timely importation of certain food products and tighter price monitoring to prevent speculative trading to help ease price pressures.
He said other measures recommended are lowering logistics and shipping costs and increasing agricultural productivity. In July, headline inflation climbed to 4.9 percent year-on-year, its fastest pace since October 2011.
Despite the faster pace of price increases, he said that year-to-date inflation stood at 4.3 percent, still within the government’s 3 percent to 5 percent target range for 2014.