The year-to-date (YTD) inflation rate will still be lower than the Bangko Sentral ng Pilipinas’ (BSP) target band for the year, a senior official at the central bank said.
BSP Deputy Governor Diwa Guinigundo said that despite the impact of the natural calamities that battered the country this past few months, year-to-date inflation rate may still settle below the central bank’s 3-percent to 5-percent target range for 2013.
Earlier, the BSP said that the impact of the damages caused by Typhoon Santi could have triggered a higher inflation rate for October.
The monetary authority said that inflation in October could settle within a range of 2.8 percent to 3.6 percent.
The BSP said that food prices, particularly rice and fresh vegetables, were higher during the month because of the damages caused by the typhoon.
On the other hand, Guinigundo said that the earthquake in Bohol and Cebu may also contribute to the higher inflation for the month.
“Basically, [because of]natural calamities . . . there will temporary heat on the supply side . . . its going to be one off,” he said.
However, the BSP official said that higher inflation rate is “not going to be consistent,” adding that January to October inflation rate will still be lower than 3 percent.
“In short there is sufficient monetary space,” he added.
Earlier, the BSP announced that it is retaining its inflation forecast for 2013 at 3 percent, while inflation for 2014 was seen at 3.9 percent. For 2015, the BSP’s inflation forecast was at 3.4 percent.
Inflation targeting is an approach to monetary policy that involves the use of a publicly announced inflation target set by the government, which the BSP commits to achieve over a two-year horizon.
Promoting price stability is the central bank’s main priority, and the target serves as a guide for the public’s expectations about future inflation, allowing them to plan ahead with greater certainty.