MANILA – A ranking official of the Bangko Sentral ng Pilipinas (BSP) on Friday said there is no need to change the government’s 2-4 percent inflation target for 2017-2019 since this range remains appropriate vis-à-vis the current economic developments.
BSP Deputy Governor Diwa Guinigundo ruled out the necessity to change the inflation target, saying that “no matter how you measure inflation, no matter what base year you use, 2-4 percent inflation target makes sense, given our stage of development, as well as the inflation dynamics”.
After the briefing on the first-quarter 2018 Business Expectations Survey (BES), he told reporters, “If you lower it by 1 percent or 2 percent, you will tighten monetary policy and you will affect the trajectory of economic growth.”
Last Wednesday, the central bank released its inflation projection for February, at between 4 percent and 4.8 percent, with the higher end already way above the upper end of the government’s target range.
Last January, inflation ticked up to 4 percent from month-ago’s 3.3 percent primarily due to faster inflation of the food, non-alcoholic and alcoholic beverages, and tobacco indices.
Monetary officials earlier said they see above-target inflation rates in some months of 2018 but forecast normalization starting March 2019.
Guinigundo said they continue to see this inflation path for domestic rate of price increases.
Asked for his reaction to the Philippine Statistics Authority’s decision to change the base year for the consumer price index from 2006 to 2012 starting March this year, the central bank official said the new composition “will be more relevant”.
“It will be more relevant because this will be based on current taste and preferences of the general public,” he said.
