The government has changed its peso-dollar assumption for 2014 to P42-P45 from P41-P44 previously.

Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said the adjustment in the peso assumption for the year was made as economic managers consider higher growth for imports this year against exports.

Higher importation means higher demand for dollar, which in turn would fuel the US currency’s appreciation.

The increase in importation is due partly to the government’s rehabilitation program in areas devastated by Typhoon "Yolanda" (international name: Haiyan) in November 2013.

To date, the peso is trading at the P43-level to a dollar.

Guinigundo said the expansion in the US economy has nothing to do in the change in the government’s peso-US dollar assumption citing that “global financial volatilities are given,” referring to the impact of US growth on global financial markets.

Relatively, the range for the government’s inflation target for 2016 and 2017 is between two to four percent, similar as the 2015 target.

Monetary officials are confident that rate of price increases will remain within the government’s target for this year and the succeeding years even with the sustained rise of inflation in the past months.

As of last May, inflation averaged at 4.1 percent, at the upper half of the three to five percent target for 2015.

The faster inflation rate was traced to higher inflation primarily of food, non-alcoholic beverages, and oil as well as construction materials, clothing and housing.

This was traced to supply-side factors given the higher needs for these items in areas devastated by “Yolanda.”

Some analysts project inflation to peak in the third quarter and then go down starting in the last quarter of the year.

The analysts said monetary officials will not allow inflation to go out of hand in lieu of their price stability mandate.*PNA

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