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By Chino S. Leyco, Reporter
CONSUMER price increases in February may have
accelerated further due to higher commodity prices, the Bangko
Sentral ng Pilipinas (BSP) said Friday.
BSP Governor Amando M. Tetangco Jr. said average
inflation may range between 4.8 percent and 5.5 percent, from 4.9
percent in January. That month’s pick up in the average was higher
than the December inflation of 3.9 percent and the fastest in 15
months.
“Inflation in February may have risen because
of elevated prices of key food items such as rice, meat, corn and
flour, which comprise around 13.5 percent of the consumer price
index basket,” Tetangco said in text message.
He said the central bank expects that this year,
monthly inflation would trace a “hump-shaped path.”
“Key risks for the outlook for the year
continue to be oil and other commodity prices,” he added.
Last January’s inflation figure exceeded the
BSP forecast of between 3.7 percent and 4.4 percent. Inflation the
previous year was 3.9 percent.
The NSO said all the commodity groups posted
higher annual price increases during the first month of this year.
For this year, the inter-agency Development and
Budget Coordinating Committee set the inflation target at 4 percent
plus or minus one percentage point on account of rising prices of
oil and non-oil commodities in the international market; possible
upward adjustments in transport fares, utilities and wages; possible
occurrences of weather-related disturbances affecting supply; and
growth in domestic liquidity brought about by continued heavy
inflows of foreign exchange.
The government plans to undertake another
reduction in the tariff on oil imports to alleviate the impact of
rising international prices.
Similarly, a growing number of importers have
been seeking cuts in tariffs to mitigate the high price of other
commodities traded abroad. Flour millers earlier sought government
relief due to skyrocketing prices of wheat and flour in the
international market, which they fear would bid up the price of the
pan de sal, a Filipino breakfast staple.
Meanwhile, the peso has continued to appreciate,
hitting fresh eight-year records, due to strong inflows of
remittances by overseas Filipino workers and foreign investments,
especially in the stock market and in other peso-denominated
financial assets. While the strong peso has dampened the cost of
imported fuel, rising dollar inflows has been a cause of concern for
the BSP since these may likewise bid up prices overall.
The higher foreign inflows have been due to
record low interest rates in the US that caused a wider differential
with domestic rates. Successive cuts in the Federal funds rate has
brought the US overnight rate to 3 percent, whereas corresponding
reductions by the BSP brought its own borrowing rate to 5.25
percent.
The overnight rate is what banks charge each
other for short-term borrowings.
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