Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the central bank continues to be on the lookout for developments in the global supply chain as it may impact the county’s inflation.
In his press conference Thursday, Diokno said current disruptions in the global supply chain are mainly driven by the weaker capacity of producers to meet demand because of labor shortages and limited mobility brought about by the pandemic.
He added those businesses that heavily rely on global supply chains for production inputs are experiencing delays in delivery, diminishing supply of raw materials, and higher input prices.
Global supply chain issues also include backlogs in shipping ports, power shortages, and reimposition of lockdowns.
The central bank chief added that the emergence of the Omicron variant may further prolong the supply chain disruptions as some governments are closing their borders to mitigate the spread of the new strain of the virus.
“Amid a challenging global economic environment, the BSP shall continue to be vigilant in monitoring the potential inflationary risks that may arise from supply shortages while providing the appropriate policy support to help ensure a sustainable path to economic recovery,” Diokno said.
The BSP added that as the country remains in the early stage of recovery, impacts of the global supply chain disruptions to domestic prices “appears limited as indicated by the path of underlying inflation”.
In November, inflation rate fell for third consecutive months at 4.2 percent.
Despite the inflation rate last month exceeded the government target of 2 to 4 percent, the BSP remains optimistic that average inflation will fall within the government’s target as supply-side issues diminish.