The World Bank (WB) recently announced that it sees inflation in the Philippines likely to go down this year and fall within the target range set by the Bangko Sentral ng Pilipinas (BSP), according to a BusinessWorld news report.
To put things in perspective, posted below is an excerpt from the BusinessWorld report. Some parts in boldface…
PHILIPPINE INFLATION is likely to slow this year to fall within the central bank’s target range, but higher transport charges and domestic rice production pose upside risks, the World Bank said.
In its latest monthly update, the World Bank said that the entry of more rice imports under lower tariffs should help keep inflation within the government’s 2-4% target.
“Inflation resumed its downward trend in August and is on track to fall within target this year,” the Washington-based lender said.
The consumer price index (CPI) eased to 3.3% in August from 4.4% in July. Inflation averaged 3.6% in the first seven months.
The Bangko Sentral ng Pilipinas (BSP) projects inflation to average 3.4% this year.
“The balance of risks to the outlook has shifted toward the downside given expected reductions in rice prices as more imports arrive under the reduced tariff regime,” the World Bank said.
An executive order cutting tariffs on rice to 15% from 35% took effect in July. This helped rice inflation ease to 14.7% in August from 20.9% in July.
However, the World Bank said higher transport and electricity charges, as well as possible global oil and food price shocks still provide upside risks to the inflation outlook.
“Domestic rice production and prices also remain vulnerable with the La Niña weather phenomenon expected to bring more rainfall and intense typhoons in the remaining months of the year,” World Bank said.
Meanwhile, the World Bank said recent external and domestic developments have given the BSP more space for policy easing.
“Peso appreciation, driven by a wider US interest rate differential, supports domestic disinflation. This gives more room for further normalization of domestic monetary policy,” it said.
Let me end this post by asking you readers: What is your reaction to this recent development? Do you think inflation in the Philippines will continue to slow down as the end of 2024 approaches?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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