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By Maricel E Burgonio, Reporter
THE Bangko Sentral ng Pilipinas (BSP) expects
inflation to breach its target for the year, with price increases
seen to have accelerated further last month due to record prices of
oil and food products.
BSP Gov. Amando Tetangco Jr. said inflation for
March is projected to be within the range of 5.3 percent to 5.9
percent.
“With this, the hump we are projecting for
2008 may be extended depending on how these supply side factors
evolve,” he said.
“We will continue to monitor these risks to
inflation. Nonetheless, we still expect to be within target for
2009,” he told reporters.
The BSP has set an inflation target of 3 percent
to 5 percent this year and 2.5 percent to 4.5 percent next year.
Earlier, securities analysts told The Manila
Times that financial market players are worried about the up tick in
inflation more than the economic slowdown in the US, as
higher-than-expected price increases would erode their yields from
investments.
The National Statistics Office had reported that
inflation rose to 5.4 percent year-on-year in February from 4.9
percent in January, bringing the year-to-date average to 5.1
percent.
This came mainly from higher prices of rice,
fruits and vegetables, fish, miscellaneous food, meat, rentals,
transportation and communication services, fuel, educational
services, dairy products, and cereal products.
The base effect due to low price levels last
year led to high inflation rates for fruits and vegetables and
petroleum products despite price decreases month-on-month.
The growth in the country’s money supply
however slowed down to 7.2 percent in January this year from above
20 percent last year.
If domestic liquidity growth falls within 11
percent to 13 percent, Tetangco said inflation will still fall
within the BSP’s inflation target. This slowdown in liquidity
expansion is expected to arise from the Monetary Board’s
decision to wind down some windows of its special deposit account (SDA)
while trimming the rates of the remaining ones.
The board’s decision came after successive
failures by the government to secure short-term borrowings through
the sale of Treasury bills through regular auctions.
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