Higher prices of electricity, liquefied petroleum gas (LPG), and some agricultural items, with the latter due to the impact of Severe Tropical Storm Paeng, are seen to push the domestic inflation rate to a range of between 7.4 percent and 8.2 percent for November 2022.
In a statement Tuesday night, the Bangko Sentral ng Pilipinas (BSP) said these factors are seen to be countered by the decline in petroleum prices along with the prices of pork and the appreciation of the Philippine peso against the US dollar.
“More importantly, inflation is projected to gradually decelerate in the succeeding months as the cost-push shocks to inflation due to weather disturbances and transport fare adjustments dissipate,” it said.
The statement also noted that the “timely implementation of non-monetary measures will also help temper price pressures in the months ahead.”
“The BSP continues to monitor closely emerging price developments to enable timely intervention that could help prevent the further broadening of price pressures, in accordance with the BSP’s price stability mandate,” it added.
The rate of price increases accelerated further to 7.7 percent in October, the highest since December 2008, due to upticks in the food and non-alcoholic beverage index, among others.
BSP Governor Felipe Medalla told journalists Tuesday night that signs are pointing to a possible deceleration of the domestic inflation rate, with the peak to be either in December 2022 or January 2023.
He said supply shocks, such as the prices of electricity and adjustment in the public utility fare, drive the current rate of price increases.
He said wage hikes are also possible, noting that although this is normally done once a year, authorities may approve a second hike by citing supervening events.
“These are the things that we’ve been watching all along, that the supply shock will bring about responses,” he said.
Medalla said these are the factors that may drive inflation in the coming months despite the appreciation of the peso against the US dollar and the drop in oil prices.
“But what we are confident of is that we will be on a target-consistent path. And the moment you see it going down, it will continue to go down,” he said.
He, however, pointed out that “it’s a question of when (the inflation will start to go down).”
“The highest year-on-year headline inflation is either this coming report or next month. We’re still confident that by middle of next year, July or August, inflation will be closer to 3 (percent) than to 4 (percent),” he added.
The government’s inflation target is between 2 percent and 4 percent.
As of October, the average inflation rate stood at 5.4 percent.*PNA