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SP Statement on the Medium-Term Inflation Path

The April 2023 inflation outturn of 6.6 percent is within the BSP’s forecast range of 6.3 to 7.1 percent, consistent with the overall assessment that inflation will remain elevated over the near term before gradually decelerating back to target range towards end-2023.

The balance of risks to the inflation outlook for 2023 and 2024 also remains tilted heavily towards the upside. Despite the recent slowdown in food inflation, the potential effect of ongoing supply shortages continues to pose an upside risk to the outlook. Other upside risks emanate from the impact of higher transport fares, increasing electricity rates, as well as above-average wage adjustments in 2023. On the downside, the impact of a weaker-than-expected global economic recovery continues to be the primary factor that could dampen inflation.

The Monetary Board will consider the latest inflation outturn along with the upcoming GDP release for Q1 2023 in its meeting on monetary policy on 18 May 2023 as it remains committed to adjusting the monetary policy stance as necessary to prevent the further broadening of price pressures as well as the emergence of additional second order effects. 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.

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