The Bangko Sentral ng Pilipinas (BSP) sees inflation rate for the month of June settling at 4.3 percent from May’s 4.5 percent, according to BSP Governor Benjamin E. Diokno.

The BSP’s point inflation projection for June of 4.3 percent comes from its forecast range of 3.9 percent to a high of 4.7 percent.

The central bank’s Department of Economic Research (DER) in a statement Wednesday said petroleum products’ higher prices and the upward adjustment in the electricity rates of Manila Electric Co. are sources of price pressures in June. “A slightly weaker peso (is one of) the main sources of upward price pressures for the month,” it added.

“These could be partially offset by the decline in prices of key food items, such as rice, meat and fruits due to improved supply conditions,” the DER also said.

Last June 24, for the Monetary Board’s fourth policy meeting, the BSP kept the key rate steady at two percent to support a still fragile local economy. The Monetary Board said recovery is still tentative because of COVID-19 cases.

In the same meeting, the BSP revised its inflation forecast higher to four percent for 2021 versus its previous (May 13) projection of 3.9 percent. For 2022, the forecast is three percent, also higher than earlier estimate of 2.9 percent. The BSP also announced a 2023 inflation projection of three percent.

The BSP revised its inflation forecasts higher because of trends in global crude oil prices and improving growth outlook of other countries.

Upside inflation pressures continue to come from international commodity price increases amid supply-chain bottlenecks, and the rise in global demand.

Downside risks, on the other hand, come from the threat of new COVID-19 variants which will again force the government to implement stricter lockdown measures that will curtail economic activity.

Generally, for the BSP, inflation expectations are higher for 2021 but anchored to target in 2022 until 2023. The elevated inflation expectations in the near term reflects the upside bias of the risks to the inflation outlook due to supply disruptions and rising global crude oil prices.

The inflation averaged at 4.5 percent in the first quarter, up from the fourth quarter 2020 of 3.1 percent, and from same time last year of 2.7 percent. Inflation rate in January was 4.2 percent (up from December 2020’s 3.5 percent), 4.7 percent in February and 4.5 percent in March, April and May.

Source: Manila Bulletin (