Economic managers: Inflation likely to hit 4.5% this year

Economic managers on Monday conceded that inflation would likely breach the 2-4 percent target for 2018 as they adopted the Bangko Sentral ng Pilipinas’ (BSP) forecast of 4-4.5 percent for the entire year even though they expect oil and rice prices to stabilize toward yearend.

While keeping the 2-4 percent inflation target for the period 2018-2020, the Cabinet-level Development Budget Coordination Committee (DBCC) jacked up their projected rate of increase in the prices of basic goods for this year.

They had forecast a 2-4 percent inflation rate during their meeting in April.

However, in a press conference, Budget Secretary Benjamin Diokno explained that the higher inflation forecast for 2018 at 4-4.5 percent, was “in recognition of what happened in the first five months of the year.”

In contrast, the yearly inflation forecasts were kept at 2-4 percent for the period 2019-2022.

Above target range

From January to May this year, headline inflation averaged 4.1 percent, already above the full-year target range.

Most economists expect the inflation rate to hit a new five-year high in June and even exceed the 4.6 percent rate posted last May.

The economic team blamed the elevated inflation in May to higher prices of fish and seafood, fuel and lubricants, as well as bread and cereals, including rice.

Still, Diokno said that they expect the increase in consumer prices to taper off in the second half, as both global oil prices as well as local rice prices are expected to stabilize
moving forward.

Merchandise exports growth

Meanwhile, the DBCC also cut to 9 percent the merchandise exports growth target for 2018 from 10 percent previously.

On the other hand, the imports’ goal was also reduced to a 10-percent increase from 11 percent. /