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Bangko Sentral vows to tame inflation as it hits a 5-year high

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Manolo Serapio Jr and Enrico Dela Cruz, Reuters

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="https://sa.kapamilya.com/absnews/abscbnnews/media/2018/news/06/19/espenilla.jpg"/><figcaption>Bangko Sentral ng Pilipinas Governor Nestor Espenilla. <em>Jonathan Cellona, ABS-CBN News/File</em></figcaption></figure></div><p>MANILA -- The Philippines&#x27; annual inflation rate shot up to its highest in more than 5 years in June, opening the door for a third rate hike this year as the central bank vowed to get the pace of price increases back inside its target as soon as it can.</p><p>Inflation quickened to 5.2 percent in June from May&#x27;s 4.6 percent, exceeding the central bank&#x27;s 4.3-5.1 percent estimate amid costlier food, alcoholic beverages and tobacco as higher taxes took effect this year.</p><p>&quot;The higher-than-expected June inflation outcome is a setback,&quot; Bangko Sentral ng Pilipinas Governor Nestor Espenilla told reporters in a text message.</p><p>The central bank &quot;reaffirms its strong commitment to ensure that inflation returns to within the 2-4 percent target range as soon as possible,&quot; he said.</p><p>&quot;We will review and update our situational assessment and forecast inflation path.&quot;</p><p>The BSP raised interest rates last month for the second time in 6 weeks mainly to tame inflation, becoming the region&#x27;s second central bank to deliver 2 hikes in a short time, along with Indonesia.</p><p>The central bank next meets to review policy on Aug. 9. Asked if policymakers would wait for that meeting to take action or act immediately, Espenilla declined to respond, saying &quot;enough said for now&quot;.</p><ul class="op-related-articles">	<li><a href="http://news.abs-cbn.com/business/07/05/18/inflation-quickens-for-6th-straight-month-smashes-forecasts">Inflation quickens for 6th straight month, smashes forecasts</a></li>	<li><a href="http://news.abs-cbn.com/blogs/business/07/02/18/opinion-shrinkflation">OPINION: What is shrinkflation</a></li></ul><div><strong>A HIKE IN AUGUST?</strong></div><figure class="op-interactive"><div id="IVS_ABS_Body_Video_1_Container"> <ivs-player id="IVS_ABS_Body_Video_1" data-ivs-spid="3001339" data-ivs-key="e8c22c015ca9eafa76f1e3edfa03c603" data-ivs-vid="1429726" data-ivs-floating="1"></ivs-player> <script src="https://player.ivideosmart.com/ivsplayer/v4/dist/js/iframe-parent.js"></script> <script src="https://player.ivideosmart.com/ivsplayer/v4/dist/js/loader.js"></script> </div></figure><div class="iwantbar">Watch more in <a href="~//www.iwantv.com.ph/">iWantv</a> or <a href="~//tfc.tv/">TFC.tv</a></div><p>Economists at Nomura expect a third 25 basis point hike on Aug. 9, and did not rule out further increases later this year.</p><p>&quot;We believe inflation expectations are also likely to rise further, as evident in rising demand for wage increases,&quot; they said in a note. </p><p>The June inflation reading also surpassed the 4.8 percent forecast in a Reuters poll of economists, and brought the average inflation rate to 4.3 percent in the first half of 2018.</p><p>It also marked the fourth straight month that the pace of price increase was faster than the central bank&#x27;s 2 to 4 percent goal for this year and next.</p><p>&quot;Honestly even if BSP hiked (by) 100 bps 2 years ago, inflation would still have exceeded the unrealistically low and narrow 2 percent to 4 percent target,&quot; Bank of the Philippine Islands economist Jun Neri tweeted.</p><p>While the rise in consumer prices is largely supply-driven, the central bank has said a tighter monetary policy is needed to keep inflation expectations from spiking.</p><p>Higher interest rates should also provide support for the peso, which has lost 6.5 percent against the dollar this year, making it one of Asia&#x27;s worst performing currencies.</p><p>Following the inflation data, the peso dropped to as low as 53.44 versus the dollar, near a 12-year trough. Manila&#x27;s key stock index fell 1.4 percent.</p>

<p>The central bank "reaffirms its strong commitment to ensure that inflation returns to within the 2-4 percent target range as soon as possible," Governor Nestor Espenilla said.</p>

The central bank "reaffirms its strong commitment to ensure that inflation returns to within the 2-4 percent target range as soon as possible," Governor Nestor Espenilla said.

Bangko Sentral vows to tame inflation as it hits a 5-year high

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Bangko Sentral vows to tame inflation as it hits a 5-year high

Manolo Serapio Jr and Enrico Dela Cruz,

Reuters

Published Jul 05, 2018 01:53 PM PHT

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Updated Jul 05, 2018 03:42 PM PHT

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inflation

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economy

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