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By Maricel E. Burgonio Reporter
THE Bangko Sentral ng Pilipinas (BSP)
is sticking to its inflation forecast for this year, despite a
prolonged dry spell that may cause food prices to shoot up. Food is
the biggest item in the country’s benchmark basket of goods and
services, so any drastic change in its price would have an impact on
overall inflation.
BSP Governor Amando M. Tetangco
Jr. said the central bank will abide by its earlier forecast of
between 2.6-percent and 3.1-percent inflation for this year until
such time that monetary authorities get a firm assessment of the
impact of the ongoing drought.
“We’re keeping our target for
the whole year until we get an assessment that will require a
change,” he said.
For July, the BSP said price
increases would average between 1.8 percent and 2.5 percent, from
2.3 percent in June.
Recently, the Department of
Agriculture said that farm output may differ from earlier forecasts
in light of the ongoing dry spell, which has cut water supply for
farmland across Luzon and caused eight-hour rotating power outages
in and around Metro Manila.
Based on its second-quarter
inflation report, the BSP said inflation is expected to rise
steadily until the second quarter next year, given expectations of
increasing oil prices and a possible wage hike.
The central bank assumed that the
nominal wage would increase by 7.1 percent this year and 6.7 percent
next year.
International crude prices,
meanwhile, are seen to reach $63.97 this year and $69.05 next year.
To date, crude traded at the New York Mercantile Exchange has crept
up, nearing the all-time high of above $78 a barrel.
Tetangco told reporters that
inflation is forecast to range from 3 percent to 4 percent next
year, better than the BSP target of 3 percent to 5 percent.
“The inflation forecast for
2008 is based on some increase in oil prices, possible wage hike,
firm peso and favorable supply conditions,” he said.
“Overall, this indicates a
continuing favorable inflation environment,” he added.
According to an earlier BSP
survey, private economists, however, forecast inflation would fall
further to 2.9 percent from their original forecast of 3.8 percent.
The economists polled said
inflationary pressures will be tame because of the strong peso,
subsiding base effects resulting from the implementation of the
reformed value-added tax law, and lower international oil prices.
The BSP sees the peso averaging
47 to 48 against the dollar this year.
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