BSP Says Inflation For June 2022 May Peak At 6.5%

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Inflation for the month of June 2022 may peak at 6.5%, according to BSP.

BSP — The Bangko Sentral ng Pilipinas said that inflation for the month of June 2022 could hit a high of 6.5% on the back of a weak Philippine Peso versus the United States Dollar and persistent high food prices.

BSP
Photo source: Philstar

On Thursday, outgoing BSP Governor Benjamin Diokno said that the low end of the June 2022 inflation forecast is 5.7%, still higher than the May actual inflation rate of 5.4%. The government inflation target for this year until 2024 is 2% to 4%.

For 2022, the central bank’s average inflation rate forecast is 5%.

Citing the central bank’s Department of Economic Research, the outgoing BSP chief said that the primary sources of inflationary pressures during the month are the “continued increase in domestic oil prices, upward adjustment in electricity rates, higher prices of key food items, and peso depreciation”.

These could be offset in part by lower price of LPG and fish,” Diokno said. “Looking ahead, the BSP will continue to monitor closely emerging price developments to enable timely intervention to arrest emergence of further second-round effects, consistent with BSP’s mandate of price and financial stability.

banknotes
Photo source: CNN Philippines

Based on a report, the central bank has noted that the risks to the inflation outlook are tilted to the upside not only for 2022 but also extended to 2023 before “balancing out in 2024”.

READ ALSO: BSP Says Storing Money In Containers Could Cause “Artificial Shortage”

Meanwhile, BSP Deputy Governor Francisco G. Dakila Jr. said that inflation will average at 5.6% in the 2nd half of this year because of more entrenched second-round effects of inflation and the continued increase in the global commodity prices.

Manila Bulletin reported that the Philippines’ exchange rate policy supported a freely floating exchange rate wherein the central bank allows the market to dictate the spot market, but it will intervene in cases of extreme peso rate volatility.

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