INFLATION will remain within the government’s target range of 2 percent to 4 percent despite the expected pickup in consumer prices in the months ahead, Finance Undersecretary Gil Beltran said in a report to Finance Secretary Carlos Dominguez III.
Based on the latest DoF Economic Bulletin, the country’s inflation rate could rise to above 2 percent in the near-term as global petroleum prices start to rebalance following the decision of oil producing nations to cut output.
“Inflation will likely clock above 2 percent in the coming months as suggested by [January] core inflation of 2.5 percent. Rising energy prices will contribute to higher inflation,” Beltran said.
Beltran, who is also the DoF’s chief economist, said the World Bank was forecasting the average world oil prices to rise by 28.5 percent to $55 per barrel this year, from $42.8 per barrel in 2016.
Despite the projected increase in fuel prices, Beltran said the country’s macroeconomic fundamentals remain sound as inflation stays within the targeted range.
“This [sound macroeconomic fundamentals] will provide economic authorities flexibility to maintain rapid growth despite uncertainties in the world economy,” Beltran said.
Inflation in January increased slightly to 2.7 percent from 2.6 percent in December 2016, matching DoF’s internal forecast and 0.1 percentage point higher than in the previous month, but within the target range of 2 percent to 4 percent earlier set by Bangko Sentral ng Pilipinas.
In January, transport prices rose from December’s 1.9 percent to 2.4 percent; clothing and footwear increased from 2.5 percent to 2.8 percent; housing, utilities and fuels from 1.3 percent to 1.8 percent; and recreation and culture climbed from 1.7 percent to 1.9 percent.
