‘Too early to speculate on impact of Ukraine crisis’

MANILA, Philippines — Monetary authorities are sticking to the inflation forecast as it is still too early to speculate on the repercussions of Russia’s possible invasion of Ukraine, the Bangko Sentral ng Pilipinas (BSP) said.

BSP Governor Benjamin Diokno said it is still early to pinpoint the impact of the Russia-Ukraine war on the Philippines especially in terms of inflation.

“I know that many people are getting nervous because of the Russia-Ukraine incident and of course the rising oil prices. The situation is fluid,” Diokno said.

The BSP sees inflation staying within the two to four percent target unless global crude prices breach the $95 per barrel level on a sustained basis.

“As far as oil prices are concerned, our threshold is $95 per barrel, there will be no change in our forecast. But it has to be a sustained increase over $95 for it to have a significant change in our forecasts,” the BSP chief said.

Oil prices breached $100 per barrel for the first time since 2014 yesterday as Russia moved troops into Ukraine.

Last Feb. 17, the Monetary Board raised its inflation forecasts to 3.7 percent instead of 3.4 percent for this year and to 3.3 percent instead of 3.2 percent for next year.

The BSP now expects global oil prices to average $83 per barrel or $10 higher than the previous $73 per barrel. However, it expects prices to ease going forward on expectations of higher supply.

“But as you know, we adjust our forecasts based on the most recent data. So we cannot give a revised forecast at this point based on changes in the oil prices,” he said.

The consumer price index (CPI) accelerated to 3.9 percent last year from 2.4 percent in 2020 due to rising global oil prices with the easing of COVID restrictions as well as elevated food prices caused by weather-related disturbances and African swine fever outbreak.

Inflation eased to a 15-month low of three percent in January from 3.2 percent in December. This was the lowest since the 2.3 percent inflation recorded in October 2020.

“Now on the situation in Ukraine, that is another incident that is fast moving, very fluid. So it’s not wise for us to speculate on that at this time,” Diokno said.