Inflation risks on the rise but manageable, says BSP

MANILA, Philippines - The Bangko Sentral ng Pilipinas said current risks to inflation are on rise but stressed that the increase in commodity prices is still manageable.

“The balance of risks to future inflation is now slightly skewed to the upside,” the BSP said.

Inflation stood at an average rate of 2.8 percent in the first nine months of the year, well-within the BSP’s three- to five-percent target for this year.

“Potential increases in oil prices due to the ongoing Syrian crisis, faster domestic liquidity growth and expected higher electricity rates in Mindanao constitute the upside risks to inflation,” the central bank said.

Domestic liquidity growth hit 30.9 percent in August, driven in part by the funds flushed out of the BSP’s Special Deposit Accounts (SDA).

“Nonetheless, M3 growth rates are expected to decelerate once the adjustments from the recent finetuning of the SDA facility have been completed and, thus, are not expected to translate into significant inflationary pressures,” the central bank said.

The central bank said the rise in commodity prices is expected to remain manageable.

“The outlook for inflation remains broadly in line with the target range over the policy horizon,” the BSP said.