In a statement, the BSP said resuming monetary policy tightening "is necessary to prevent the renewed broadening of price pressures as well as the emergence of additional second-order effects (given) the persistent upside risks to the inflation outlook."
The BSP issued the statement after the Philippine Statistics Authority reported that inflation in September increased to 6.1 percent from 5.3 percent in August due to higher food inflation and oil prices. The new inflation outturn is within the forecast range of 5.3 to 6.1 percent.
The BSP said it expects inflation to remain elevated in the coming months due to the continued impact of supply shocks on food prices and the rise in global oil prices. Nonetheless, inflation is still projected to decelerate to within the inflation target by the end of 2023 without further supply shocks.
According to the BSP, the risks to the inflation outlook remain skewed significantly to the upside for 2023 to 2025.
"The potential impact of new petitions for transport fare adjustments, higher domestic prices of key food items facing persistent supply constraints, higher-than-expected minimum wage adjustment, the impact of El Nino weather conditions on food prices and utility rates, and higher electricity rates are the major upside risks to the inflation outlook," it said.
The BSP said the impact of a weaker-than-expected global recovery is the primary downside risk to the outlook.
"The BSP also continues to support the timely and effective implementation of non-monetary government measures to mitigate the impact of persistent supply-side pressures on inflation," it added.
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