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Philippines can meet CPI goals unless oil holds over $95: Diokno

·2-min read
The Philippine oil refinery complex of Petron Corp. is seen on the coast of Bataan province nortwest of Manila on February 10, 2009. Petron Corp. on February 27, 2009 reported a 3.92 billion-peso (80.7 million USD) net loss for calendar year 2008, blaming crude price volatility for plunging it into the red. The wild swings in crude oil prices, from a record 141 dollars a barrel in July 2008 to 40 dollars in December, saw Petron incur significant losses on the value of its inventory, it said in a statement. AFP PHOTO/ROMEO GACAD (Photo by Romeo GACAD / AFP) (Photo by ROMEO GACAD/AFP via Getty Images)
FILE PHOTO: The Philippine oil refinery complex of Petron Corp. is seen on the coast of Bataan province nortwest of Manila on February 10, 2009. (Photo: ROMEO GACAD/AFP via Getty Images)

By Clarissa Batino

Philippine central bank Governor Benjamin Diokno said the country can meet its inflation forecasts for this year and next unless crude oil prices rise above $95 a barrel and settle around that level.

Oil prices should face less pressure this year after the Organization of Petroleum Exporting Countries pledged to increase output and as the pandemic continues to limit travel, Diokno said in a mobile-phone statement to reporters on Saturday.

“Other things constant, our inflation forecasts for 2022 and 2023 would hold unless world crude prices settle above $95 per barrel from January 2022 until December 2023,” Diokno said. “Inflation could settle above the target range if crude oil prices average higher than $95 per barrel for 2022 and 2023.”

Countries including the U.S. and Britain may also be compelled to release some of their reserves, he said. His comments came after oil posted a fourth weekly gain, its longest winning streak since October. West Texas Intermediate futures in New York closed 2.1% higher on Friday to $83.3 per barrel, rising 6.2% for the week.

The monetary authority, which expects consumer price gains to return to its 2%-4% target this year and next after breaching the goal in 2021, based its forecasts on a Dubai crude oil average of $72.66 a barrel in 2022 and $68.74 a barrel in 2023, he said.

“The assumption is that oil prices are sustained at these levels starting January 2022,” the governor said.

The central bank in December had forecast inflation to average 3.4% this year and 3.2% in 2023. It sees price gains easing below 3% in the first quarter of this year before accelerating above the midpoint for the remainder of 2022, Diokno said.

© 2022 Bloomberg L.P.

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