Inflation hits its highest level in four years
INFLATION accelerated to 6.9% in September, the Philippine Statistics Authority (PSA) reported on Wednesday, its highest level in four years, mainly due to rising food prices.
It was significantly higher than the 4.1% recorded a year earlier.
It brought year-to-date inflation to 5.1%, approaching the upper limit of 4.5-5.5% expected by the government for 2022.
Prospects for further hikes in key interest rates have increased. The Bangko Sentral ng Pilipinas (BSP), which wants to keep consumer price growth at 2.0-4.0%, had forecast inflation in September to rise to 6.6-7.4%.
“The BSP stands ready to take further policy measures to bring inflation to a path consistent with the medium-term objective, in line with its primary objective of promoting price stability,” the central bank said in a statement.
He said inflation risks remained “broadly balanced”, with price pressures expected to come from higher global non-oil prices, pending demands for further tariff hikes, the impact of weather disruptions, as well than a sharp increase in sugar prices.
“[T]The impact of a weaker than expected global economic recovery continues to be the main downside risk to the outlook,” he added.
PSA Undersecretary Claire Dennis Mapa Screenshot of September 2022 Inflation Report Live Press Conference | October 05, 2022
PSA Undersecretary Claire Dennis Mapa said food prices were rising in different regions.
“Reducing inflation would really mean reducing food inflation. This is really one of the reasons why inflation has increased, not only nationally but also regionally,” he added.
Mapa said the PSA was also monitoring the peso’s decline against the U.S. dollar as further depreciation would have a “ripple” impact.
The Department of Finance (DoF) said inflation is expected to remain high for the rest of the year given recent tariff hikes and the impact of Super Typhoon “Karding” on food supplies.
“Inflation is still considered to fall within 4.5% [and] assumption of 5.5% of the Development Budget Coordination Committee for 2022,” he said.
Continued timely implementation of government measures would be crucial in mitigating the impact of lingering supply pressures on food and other commodity prices, the DoF added.
These include “increasing local production, ensuring the timely importation of goods, fertilizers and raw materials, and improving distribution efficiency.”
“Given regional disparities in production and price, it is equally important that these goods are efficiently distributed,” the DoF said.
“The government is already looking at areas with high inflation and which goods are causing inflation to address any bottlenecks.”
The National Economic and Development Authority stressed that the rise in inflation was not limited to the Philippines, noting that other countries were affected by soaring commodity prices, logistics bottlenecks, weather shocks and the strengthening of the US dollar.
Up since March
Rizal Commercial Banking Corp. chief economist Michael Ricafort said inflation had risen steadily since March 2022, blaming the Russian-Ukrainian war that began on Feb. 24, 2022, which raised global oil prices. and other global commodities earlier this year.
“Global prices for crude oil and other commodities have already fallen recently amid the risk of recession in the United States, which is the world’s largest economy, due to aggressive interest rate hikes by the Reserve. federal government in a bid to bring down high US inflation from 40-year highs,” Ricafort said.
He added that some shutdowns in China, which is the world’s second largest economy, have also caused inflation.
“Inflation could still peak around October 2022 at around 7% and could mathematically decline [after that]“, added Ricafort.
A major catalyst for inflation in the Philippines includes storm damage from Super Typhoon Karding in central and northern Luzon, particularly in hard-hit provinces.
“[These regions] are among the largest producers of rice, corn, vegetables and other food/agricultural products,” said Ricafort.