BSP Gov Medalla Says Inflation Is Normalizing

Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla had guaranteed foreign investors that the inflation in the Philippines is on target and is set to normalize below 2% by 2024.

“We’re already beginning to see signs that month-on-month inflation is normalizing,”  mentioned Medalla during the Europe-centric Philippine Economic Briefing held last January 23 in Frankfurt, Germany.

Medalla alongside members of the economic team hailing from the socioeconomic, budget, and finance departments was optimistic about hitting the 2 – 4% inflation earlier than predicted.

“We expect that by end of the third quarter or by the fourth quarter, we will be already below four percent. Indeed, our models predict that because of high base effects, we will actually be below two percent early 2024,” mentioned Medalla.

By 2024, Medalla mentions that the inflation of the country “will be more or less near the mid-point of the target.”

The high inflation remains an issue for the Philippines in reaching its 6 – 7% growth projection for the year. The BSP likewise predicts that inflation will decrease to 4.5% come 2023. The actual percentage of inflation in 2022 was 5.8%.

Despite this, 4.5% remains above the target of 2 – 4% of the government.

Medalla mentions that inflation is largely due to supply-shock inflation. This remains a g; global problem but on the local level, this has been reflected in agricultural item shortages.

“Obviously, the solution is to import more and get rid of all the non-tariff barriers … I’m satisfied that the government is now doing everything it can to speed up importation,”  he says.

Source: Manila Bulletin