Inflation rate in check says BSP

By , on January 5, 2015

Shutterstock Photo
Shutterstock Photo

MANILA – The Bangko Sentral ng Pilipinas (BSP) on Monday said that the inflation target for the years 2015 and 2016 will remain within the target despite price hikes in water rates and train fares in Metro Manila.

“Despite the approved upward adjustments in LRT (Light Rail Transit) and MRT (Metro Rail Transit) fares as well as in water rates in Metro Manila, the BSP expects inflation to remain within the target range of … (two to four percent) in 2015 and 2016,” said BSP Governor Amando M. Tetangco Jr.

The fare hike for the MRT and LRT Lines 1 and 2 started yesterday. The new base fare will now be P11 with an additional P1 for every kilometer. Thus, train fare increase for the LRT 1 will be at 23 percent, LRT 2 at 30 percent, and MRT at 58 percent.

“The BSP’s latest baseline inflation forecasts already incorporate an assumption of an LRT/MRT fare increase beginning January 2015,” said Tetangco.

He added, “The estimated impact on average inflation in 2015 of the fare adjustment in interurban railway transport system is 0.11 percentage point.”

Meanwhile, Manila Water Co. Inc. also announced that they will be increasing their rates by P0.36 per cubic meter starting this month. Likewise, Maynilad Water Services also said that consumers may expect price increase this month.

“The approved adjustments in water rates in Metro Manila are likely to be marginal given the magnitude of the approved increases. Staff estimates point to an incremental increase in 2015 average inflation of 0.01 percentage point due to the water rate increase,” Tetangco explained.

In 2014, inflation rate was highest at 4.9 percent in July and in August because of the demand in supply brought about by Typhoon Yolanda that struck the country late 2013.

Based on recent government data, the average inflation rate last year was 4.3 percent for the first 11 months of the 2014. This is within the target of BSP of three to five percent.

“The BSP’s assessment indicates that evolving price conditions point to a manageable inflation environment,” Tetangco said.

The BSP expects inflation to average three percent this year and 2.6 percent in 2016. These are both within the two to four percent goals for both years.