Tax reform to add less than 1% to inflation — BSP
It’s not a major concern for the central bank at this point.
Higher duties on fuel and other goods will surely push inflation higher this 2018, but not at a level that would cause alarm from the Bangko Sentral ng Pilipinas (BSP).
“We anticipate that the impact on inflation is less than one percentage point. But that hardly justifies a monetary response from the BSP because the impact is on the supply side,” BSP Deputy Governor Diwa Guinigundo said.
BSP officials have said they remain confident that inflation will remain manageable and settle within the 2-4 percent target for 2018 despite the introduction of higher excise taxes on oil, cars, and even sodas and sugary drinks.
Guinigundo added that the tax reform will actually be positive for the economy, despite concerns that it will raise the prices of basic goods.
“Of course, the tax reform would allow the government to fund infrastructure projects and in the process increase our potential output and in the end enhance the supply,” he added.