BANGKO Sentral ng Pilipinas (BSP) Gov. Eli Remolona warned that they are monitoring the possible supply shocks that could pose as a threat to derail  the inflation outlook for 2024.

Among them include the local rice production and importation, and the looming El Niño phenomenon which are the main causes of an increased inflation.

Remolona said that inflation can settle at 4.2 percent in 2024.

This is still more than the government’s 2-4 percent target. 

“Our baseline forecast for inflation in 2024 is around 4 or 4.2. (percent). Not quite within range but close to being within target. But supply shocks may derail that forecast including what’s going on with rice, the imports of rice. El Niño is a factor. So it depends on those risks,” Remolona said.

The average inflation for last year was at 6 percent.

In December 2023, rice inflation was at 19.6 percent, the fastest since March 2009. 

Remolona explained that there is an urgent need to contain the supply shocks to temper expectations that may influence prices of commodities.

“We began to realize the supply shocks is very important for the inflation outlook, not because of the shocks themselves. We expect them to dissipate, but because of the second round effects from those shocks. They affect expectations and those expectations affect second round effects which we see in prices of services for example, in wages, transport fares,” Remolona said.

“I don’t know. It depends on the data, as we always say. But it’s looking good. We like the trend so far. I would say it’s possible, but maybe not likely,” he added.