BSP forecast: August inflation at 3.9%-4.8%

Lower prices of world crude oil and local fuels will cushion the increases in the cost of rice, vegetables and electricity on inflation this month, according to the Bangko Sentral ng Pilipinas. BSP Governor Amando Tetangco Jr. said in a text message to reporters Wednesday the inflation forecast for August ranges from 3.9 percent to 4.8 percent. Inflation last July was at 4.6 percent was recorded at 4.3 percent in the first seven months of the year. Tetangco also assured that the BSP is keeping close tabs on the unrest in the Middle East and North Africa and the economic health of the United States and Europe. "These impact on global aggregate demand and international prices of oil," he said. “We will also be monitoring investor appetite to see how these developments would translate into the direction and magnitude of capital flows," Tetangco added. BSP Deputy Governor Diwa Guinigundo said they scaled down to 4.7 percent from 5.06 percent their inflation forecast for 2011, to 3.7 percent from 3.9 percent for next year. Investors in search of yields could bring their capital to emerging markets like the Philippines more so now that the US Federal Reserve is considering rolling out another program to give the sluggish US economy another boost, Guinigundo said "They will go to emerging markets because they are faced with inflation problem, if inflation is high interest rates are also high," Guinigundo explained. — ELR/VS, GMA News