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By Maricel E. Burgonio Reporter
Inflation is expected to a peak
at 11 percent in June before it starts to decline in July, the
Bangko Sentral ng Pilipinas said.
Central bank Gov. Amando Tetangco
Jr. said inflation is likely to reach 10 percent to 11 percent year
on year in June as global oil and commodity prices remain high.
World oil prices surged $11 over the weekend, settling at $138.54
per barrel.
Inflation soared to a nine-year
high of 9.6 percent in May and to 8.3 percent in April.
“Inflation may reach 10 percent
to 11 percent in June and drop in July,” Tetangco told reporters.
But inflation is expected to decline beginning in July, as food
price stabilizes and increase in oil prices will be moderate, he
added.
“Oil price will increase, but
it will be moderate, as well as rice prices,” he said.
“The demand from oil is
starting to go down, as growth for many countries started to go
down,” the governor added.
Price controls
Earlier Thursday, the Monetary
Board, the policy-making body of the Bangko Sentral, hiked its key
policy rates by 25 basis points to prevent inflation from rising
further. At the same time, the central bank hinted at further rate
hikes this year to support price stability.
With the latest rate increase,
the Bangko Sentral raised its inflation forecast to between 7
percent and 9 percent this year, and 4 percent to 6 percent next
year.
The forecast exceeds Bangko
Sentral’s inflation target of 3 percent to 5 percent this year and
2.5 percent to 4.5 percent next year.
Meanwhile, the central bank’s
key policy rates stood at 5.25 percent for overnight borrowing or
reverse repurchase facility and 7.25 percent for overnight lending
or repurchase facility.
The interest rates on those
facilities and special deposit rates also increased. The Bangko
Sentral last increased its rates in October 2005.
The recent increase in policy
rates will help address risks to inflation in 2009, which the
adjustment was primarily driven by transport fare and wage hikes.
Higher inflation affects the
country’s economic growth as the interest rates will be higher and
consumer spending will be sluggish.
The peso also breached the P44
level last week because of high inflation in May. From January to
May, the inflation rate rose 6.9 percent, higher compared to the
central bank target this year.
For food alone, the country’s
annual inflation rate was up to 14.3 percent in May from 12 percent
in April. The price of rice was higher at 31.7 percent in May from
24.6 percent in April.
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