By Bianca Cuaresma, March 1 2019; Business Mirror

Image Credit to Bloomberg

THE growth of local consumer prices may have reverted to within-target range in as early as Febuary this year, based on the Bangko Sentral ng Pilipinas’s (BSP) forecast for the February inflation.

As announced by the Central Bank on Thursday afternoon, the BSP Department of Economic Research projects February inflation to settle anywhere between 3.7 and 4.5 percent.

“Higher domestic oil prices and the upward adjustment in electricity rates provided upside price pressures to inflation during the month. These may be partly offset by lower prices of rice and other agricultural commodities given the appreciation of the peso and ample supply particularly of rice following the recent harvest and arrival of rice imports,” the BSP said in a statement.

“Looking ahead, the BSP will continue to be watchful of evolving price trends to ensure that the monetary-
policy stance remains appropriate to maintaining price stability that is conducive to a balanced and sustainable growth of the economy and employment,” it added.

Should inflation fall to the floor of the BSP’s forecast range for February, the local price growth will fall to its lowest expansion since January 2018, when it hit 3.4 percent.

Meanwhile, if inflation hits the BSP forecast ceiling, it will be an acceleration from the 4.4-percent inflation seen in January this year.

In their February meeting, the Monetary Board scaled back their inflation forecast to 3.1 percent on average for this year, down from the 3.2-percent forecast announced by the BSP in their December meeting.

For 2020, the inflation forecast is broadly unchanged at 3 percent.

The reduction in the forecast for this year was hinged on three things: lower oil prices in the global market, base effects and the expectation of lower global nonoil prices.

The BSP also said that as inflation conditions turn favorable, the Monetary Board decided in February that current monetary-policy settings are already appropriate, as previous monetary responses continue to work their way through the economy.

The BSP in 2018 let out a series of monetary-policy hikes—a total of 175 basis points—to bring inflation back to more normalized levels.

The BSP is set to have its next monetary-policy meeting on March 21, under a new Monetary Board chairman following the death of BSP Governor Nestor A. Espenilla Jr.