August 31, 2022

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BSP sees 5.9-6.7% inflation in Aug.

HEADLINE INFLATION likely settled within 5.9% to 6.7% in August as food prices continued to rise, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.

“Inflation for the month was driven by the continued increase in key food prices, but could be offset in part by the decline in global oil prices, the reduction in electricity rates, lower meat and fish prices, and appreciation of the peso,” it said in a statement.

If realized, August inflation would exceed the central bank’s 2-4% target for the fifth straight month.

The upper end of the inflation forecast or 6.7% would be the fastest in 45 months, or since 6.9% in October 2018.

Headline inflation stood at 6.4% in July.

The Philippine Statistics Authority (PSA) will release August inflation data on Sept. 6.

Global oil prices fell for a third straight month in August over concerns that monetary tightening will hurt economic growth.

As of Aug. 23, pump price adjustments for the month stood at a net decrease of P0.75 a liter, diesel by P1.25 and kerosene by P0.95.

On Tuesday, oil companies raised diesel prices by P6.10 a liter and gasoline by P1.40 a liter.

Meanwhile, Manila Electric Co. (Meralco) said the overall rate for a typical household went down by P0.2087 to P9.5458 per kilowatt-hour (kWh) in August.

The BSP also said inflation could be offset by the peso’s appreciation against the US dollar.

The peso remained at the P56-a-dollar mark in August, closing the month at P56.145 on Wednesday, down by P5.145 or 10.08% from its P51 finish on Dec. 31, 2021.

“Looking ahead, the BSP will continue to monitor closely emerging price developments to enable timely intervention that could prevent further broadening of price pressures, consistent with BSP’s mandate of price stability conducive to sustainable economic growth.”

The central bank has increased borrowing costs by 175 basis points since May as it seeks to bring inflation back within target.

At its August meeting, the Monetary Board raised its average inflation forecast for 2022 to 5.4% from 5%, exceeding the 2-4% target band.   

For 2023, the BSP’s inflation forecast was lowered to 4% from 4.2%, as well as the 2024 outlook to 3.2% from 3.3%. — KBT