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By Chino S. Leyco, Reporter
AFTER consumer price increases accelerated to a
16-month record, the Bangko Sentral ng Pilipinas (BSP) said it will
revise its inflation forecast for the next two years, citing
costlier crude and food items.
BSP Gov. Amando M. Tetangco Jr. said the
Monetary Board will revisit its estimates during its next meeting
this month given recent developments in oil and food prices. The BSP
had forecast inflation to range from 3.5 percent to 4.4 percent this
year and from 2.1 percent to 3.3 percent next year.
“We will have to look at that again given
latest developments particularly in oil prices and food prices.
Based on that, we would assess the risks, both on the upside and the
downside, and see if there’s a need to move or to hold,”
Tetangco told reporters on the sidelines of the annual thrift banks
convention.
Separately, state-run Philippine Institute of
Development Studies (PIDS) said consumer prices would grow at the
high-end of the BSP’s forecast this year.
Josef T. Yap, PIDS president, said the inflation
rate is expected to average in the vicinity of 4.8 percent to 5
percent on the back of high oil prices and other global commodities.
“Global inflationary pressure should result in
higher inflation this year,” Yap said.
As a result, Yap said interest rates are
expected to inch higher.
Last January, the Monetary Board reduced by 25
basis points the BSP’s overnight rates for a fourth consecutive
reduction since October last year.
Yap also forecast the peso-dollar exchange rate
to average between 40 and 41 this year owing to higher overseas
Filipino remittances.
The Development and Budget Coordinating
Committee, which sets the country’s macroeconomic targets, assumes
the local currency to average between 42 and 45 per dollar this
year.
Tetangco said the BSP will continue to monitor
developments to ensure that future assessments will be valid, as the
risks to the outlook continue to be driven by oil and commodity
prices, which the BSP expects to taper off toward the latter half of
this year.
The central bank chief had said the February
inflation rate was expected due to higher prices of petroleum
products and other commodities.
He earlier projected that monthly inflation
until June would rise close to five percent, but the average
forecast for the year would still fall within the middle of the
target range, or four percent.
The National Statistics Office earlier reported
that inflation last month went up to 5.4 percent from 4.9 percent in
January as higher rates were posted in all commodity groups except
in fuel, light and water. Inflation a year ago stood at 2.6 percent.
The February figure was near the high-end of the
BSP’s forecast range.
In a statement released Friday, the central bank
said money supply growth eased further last January to 7.2 percent
from nine percent in December. The January expansion of domestic
liquidity or M3 was much slower than the 21.9 percent surge recorded
during the same month last year.
The BSP said the growth in domestic liquidity
continued to reflect the steady, though slower, rise in net foreign
assets of depository corporations.
Credit extended to the private sector sustained
its expansion at 7.6 percent from 7.2 percent in the previous month,
while credit extended to the public sector reversed to a positive
growth of 6 percent as lending to the national government picked up
even as lending to local government units and other public entities
continued to decline.
Growth in net domestic assets however declined
3.2 percent in January, reflecting a negative growth for the sixth
consecutive month, as the other assets or liabilities account
continued to register a negative balance following liquidity
measures implemented by the BSP in May last year.
The BSP said it closely monitors the movement of
domestic liquidity because it is one of the major indicators in the
assessment of the inflation outlook. This assessment helps the
BSP to ensure that the liquidity level is consistent with price
stability while being supportive of the growth requirements of the
economy.
-- With Darwin G. Amojelar
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