felipe m medalla : an assessment of the philippine inflation picture speech by mr felipe m medalla, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the development budget coordination committee ( dbcc ) briefing on the immediate impact of rising inflation on the national programs and projects of the government, manila, 27 february 2023. * * * chairman elizaldy co ; congressman stella quimbo ; members of the committee on appropriations ; and colleagues from government, good morning. both congresswoman quimbo and [ finance secretary ] ben [ diokno ], my colleagues, have already said quite a bit on inflation. examining the drivers of inflation the important point is that, of course, food and non - alcoholic beverages are the biggest contributors to inflation. but the other point is that the pressures on prices are broadening. to put this in simple numbers, 196 items out of the 315 [ total consumer price index ( cpi ) items in january 2023 ] that are used to calculate the price index are above 4. 0 percent, [ the upper bound of the inflation target ], and 123 of those [ above - target cpi items ] are food and beverages. so, [ it is ], quite a bit, meaning inflation is beginning to spread to the rest of the economy. but the other way to look at it is, 66 of those [ cpi items ] are not [ above target or within threshold ]. to put it bluntly, higher prices could beget higher prices. of course, the scary part is what they call a " wage - price spiral " : prices are high, wages are high ; prices are high [ er ], wages are high [ er ]. to make matters worse, if that also results [ in a vicious cycle where ] prices are high, the peso is weaker ; weaker peso, higher prices. then, we will really be in trouble. keeping supply - side pressures on the supply side fortunately, that is not the case. to some extent, we have been quite successful in preventing what we call " knock - on " effects, second - order effects of the supply shocks on inflation. historically, that has resulted in the fact that the longest period that we have had headline inflation above 4. 0 percent, [ the upper band of our target range ], is 15 months. this means after three months, the base effects take over because of the higher prices. it is harder for prices

rafael buenaventura : new year message 2005 speech by mr rafael buenaventura, governor of bangko sentral ng pilipinas ( central bank of the philippines ), at the annual reception for the banking community, manila, 18 january 2005. * * * a warm welcome to all! let me begin by thanking all of you for joining us tonight at this traditional annual reception to officially welcome 2005. but more than your presence tonight, we thank you for your full cooperation and support in working with us to keep our economy steadily moving forward, to preserve overall confidence, and to steadfastly implement reforms. the year 2004 was again another very challenging year for the banking community, being a presidential election year with all the uncertainty that usually surrounds such a major political event. we also bore witness in the second half to a sharp increase in oil prices that inevitably had major impact on the whole economy. but in spite of all these, the economy still turned in a very respectable outcome. gdp growth is estimated at 6. 2 percent. headline inflation has picked up to around 7. 9 percent in december 2004, due mainly to the feed through from energy price adjustments and other supply side shocks, but more broad - based inflationary pressures were held in check. our accumulation of international reserves, at $ 16. 1 billion at end - december 2004, was at the high end of our expectations. the peso exchange rate finished firmly at p56. 267 and has been appreciating since then. undoubtedly, record remittance inflows that will definitely exceed p8 billion for the whole of 2004 has once again shored up our economy. commendable outcomes were also contributed by our export sector. on the domestic front, healthy consumer demand helped keep the economic momentum going. in the financial system, the reform agenda relentlessly forged ahead undeterred by all the potential distractions. the long overdue asset cleanup finally got going under the spv law. as of end 2004 about p26 billion was already done and another p54 billion was firmly in the pipeline or a total of p80 billion so far. assuming these transactions would all be completed in due course, we can look forward to a lowering of the npl ratio to less than 10 percent by end - 2005 from the current 13 - 14 percent level, given 2005 economic growth projection. still, the improving npl outlook would still be more than double than the pre - 1997 crisis ratio of less than 5 percent. this under