BSP: Inflation target remains amid fare-hike speculations

Monetary authorities said Friday they are not changing the inflation target for this year and the next amid impending MRT and LRT fare hikes, toll fee increases and possible upward changes in rice prices. Despite some possible increases, Bangko Sentral ng Pilipinas Deputy Gov. Diwa Guinigundo pointed out that inflation would still fall within the 3.5-percent to 5.5-percent target this year and 3-percent to 5-percent target in 2011. Guinigundo said the prejected increase in the price of NFA rice to P28 per kilo from P25 per kilo would translate to a 0.21-percent rise in inflation this year and 0.86 percent next year. The P0.60 per kilometer hike in toll fees in NLEX and SLEX would translate to a 0.10-percent rise in inflation this year and 0.27 percent next year, he said. Also, Guinigundo said the impending hike in MRT fare to P25 from the current P15 and LRT fare to P23 from the current P17 would result to higher inflation of between 0.03 percent and 0.06 percent this year and between 0.06 percent to 0.11 percent in 2011. He said the upside risk would result to a 0.37-percent increase in inflation this year and 1.24 percent next year. "This is our initial estimate," Guinigundo underscored. On July 15, the central bank's Monetary Board decided to lower its inflation forecasts to 4 percent instead of 4.7 percent this year and to 3 percent instead of 3.6 percent for next year during its meeting last July 15 due to lower than expected inflation last May and June. —JE/OMG, GMANews.TV