The administration’s economic planners have adjusted their inflation target for 2021, expecting commodities prices to remain untamed in September and October and following a higher-than-expected outcome in August.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco Dakila Jr. announced a revision in their baseline forecasts on expectations of the cost of local goods and services to settle above the original target.
“Our baseline for 2021 was at 4.1 percent. Now, we have revised that to 4.4 percent. For 2022, the previous baseline was 3.1 percent, and it now stands at 3.3 percent,” Dakila said in a virtual press conference on Thursday.
“The main factors that led to the revision of the forecasts include the higher than expected inflation outturn in August, although it can be noted that (it) continues to be driven by short-term supply-side factors, including weather disturbances,” he added.
For 2023, inflation is expected to settle at a slightly 3.2 percent higher level from the original 3.1 percent target, the BSP executive said.
“Inflation path seems to remain above the target range up to October of 2021, and subsequently, we expect a deceleration of the inflation path so that it should settle within target by November this year,” he explained.
The government’s top economic managers expect inflation to settle within the two to four percent range this year.
Dakila considered the possibility of inflation settling above the five percent level in September as risks to this year’s outlook proved to tilt towards the upside.