Inflation to remain within target despite fare hikes

There is optimism in the government that consumer prices should prove manageable during the year and that the rate of change in prices will likely fall within the target range this year no matter the more recent variables as the approved transport-fare hike for jeepneys, for instance, the central bank said.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said the current baseline inflation projections already incorporate the adjustments in jeepney fares, as well as the possible adjustments in the Metro Rail Transit (MRT) and Light Rail Transit (LRT) tickets.

“The projections continue to show within target inflation within the policy horizon,” Tetangco said in a response to reporters. He also said the current projections will be reviewed in the next policy meeting of the Monetary Board on June 19.

Earlier this year, the Land Transportation Franchising and Regulatory Board approved the public-utility jeepney fare hike by 50 centavos in the National Capital Region, as well as in Regions 3 and 4—effective on June 14.

At its last monetary policy meeting on May 8 this year, the central bank revised its inflation forecast higher to 4.3 percent, indicating greater price pressures going forward.

Tetancgo said the scaled-up inflation number is subject for review at the next rate-setting meeting in June 19 this year.

The government anticipates for inflation to fall within the 3 percent to 5 percent target range this year. Latest inflation print showed a 4.5-percent growth in May, the highest in 30 months.

The latest inflation print also brought the five-month inflation average to 4.1 percent—slightly above the midpoint of the target range.

Other upside risks to the country’s inflation include higher food prices due to the projected El Niño phenomenon, as well as the petition for higher power rates, as cited by BSP Deputy Governor for the Monetary Stability Sector Diwa Guinigundo at the policy meeting. For next year, the government projects inflation ranging from 2 percent to 4 percent. –Bianca Cuaresma, Businessmirror