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MANILA, Philippines – Prices of basic goods and services accelerated beyond the central bank’s forecast range for November, mainly due to a surge in food prices caused by the recent series of typhoons.
Despite this, Bangko Sentral ng Pilipinas Governor Benjamin Diokno assured that last month’s 3.3 percent inflation rate was a temporary phenomenon.
In a telephone message to reporters on Friday, the central bank chief said the average inflation rate is still expected to settle “within the government’s target range of 3 percent, plus or minus 1 percent for 2020-2022. as the impact of supply Disruptions due to recent typhoons are expected to be largely transitory. “
November 2020 inflation was slightly higher than BSP’s forecast range of 2.4-3.2 percent, mainly driven by higher food inflation, particularly for vegetables, fish, fruits and meat.
As this unfolded, the central bank said that “downside risks” to the global and national economy remain despite recent progress in developing vaccines for COVID-19.
“The logistical challenges in vaccine distribution should be addressed before recovery can resume,” Diokno said. “In the short term, uncertainty remains high following the resurgence of the virus in the United States, Europe and parts of Asia.”
He warned that the re-imposition of blockades could further slow down the economic recovery.
Last month, the central bank implemented a surprising 25 basis point rate cut, further lowering its key interest rate to a record low of 2 percent.
With the rise in the inflation rate in November, the resulting negative real interest rate now stands at 1.3 percent, representing the net erosion of the purchasing power of the peso.
On Thursday, Diokno called for more fiscal spending programs to take advantage of the low cost of funds in the local financial system, amid emerging data that banks continue to avoid risky lending activities and borrowers continue to shy away from loans, activities that could help to restore economic growth.
However, he stressed that the monetary authorities were prepared to do more in the future.
“The BSP is ready to deploy its full arsenal of instruments, as needed, in fulfillment of its mandate to maintain financial and price stability conducive to [economic] growth and jobs, ”he said. [ac]
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