The inflation rate this February likely accelerated to 3.2 percent from 3 percent a month ago, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Monday, driven mainly by higher oil prices that are exacerbated by the continuing war between Russia and Ukraine.
In a statement to reporters, Diokno said the BSP’s “point inflation projection for February is 3.2 percent; projection band is 2.8 to 3.6 percent.”
Meanwhile, consumers can expect a double whammy today with pump prices going up by as much as P0.90 per liter and cooking gas or liquefied petroleum gas (LPG) by P7.70 per kilo or P84.70 per 11-kilo tank used primarily by households.
Department of Energy Undersecretary Gerardo Erguiza said that while projections from Platts say that oil prices will hit $120 per barrel, it is unlikely that domestic pump prices will hit P100 per liter.
Erguiza said the average price of gasoline is at P66 per liter to date, while diesel is at P59 to P60 per liter.
“If it hits $120 per barrel, maybe diesel will reach P73 and gasoline at P77. It will not reach P100 per liter,” he said.
Also, Arnel Ty of the LPG Marketers Association said the cooking gas increase of P7.70 per kilo will be fully implemented Tuesday.
Ty said that if the Ukraine crisis reaches a month and the European Union and the United States will send support to the ex-Soviet state “then the world market of oil will not go down.”
Based on estimates from DOE, currently LPG prices range from P794 to P1,054 per 11-kilo tank, depending on the location, brand, and market forces.
In related developments, the call to suspend excise taxes on petroleum products is snowballing at the House of Representatives, as Deputy Speakers Rufus Rodriguez and Bernadette Herrera expressed full support for calling a special session of Congress to tackle the issue.
Fuel prices increased without letup in the past 10 weeks, with the net increase in gasoline of about P18 per liter and diesel at P12 pesos.
“I support the proposal of my colleagues for a special session. We have to act now before the cost of crude and domestic fuel prices rise further,” Rodriguez of Cagayan de Oro said.
Last week, Deputy Speaker and 1-Pacman Rep. Mikee Romero, Rep. Mike Defensor of Anakalusugan, and Rep. Carlos Zarate of Bayan Muna proposed that Congress convene so it could pass bills to suspend oil taxes.
“We can meet virtually for a few days to act on those proposals,” Rodriguez said, echoing his fellow lawmakers’ appeal for leaders of
Congress to recommend to President Rodrigo Duterte to hold a special session.
Only the President has the power to convene the legislature during its recess, Rodriguez said, but Congress is on its three-month election campaign break.
“If it is really necessary and President Duterte calls for it, we are more than willing to take part in the special session with the end goal of providing much-needed relief to our people amid an unstoppable rise in crude prices,” Herrera said.
When asked what were the factors considered for the February inflation projection, Diokno cited “higher fuel prices, higher prices of selected meat products, slightly higher rice prices,” as well as “stable peso, decline in Meralco power rates, and lower prices of fish and vegetables.”
Diokno said BSP would continue to monitor emerging price developments and possible second-round effects to achieve its primary mandate of price stability that is conducive to balanced and sustainable growth of the economy.
Last week, Diokno said the BSP was sticking to its previous inflation forecast of 2 to 4 percent for 2022 and 2023 despite the Ukraine crisis, saying it was not wise now to speculate on what is going to happen.
“I know that many people are getting nervous because of the Russia-Ukraine incident and of course the rising oil prices but these are to me, these are, we don’t know yet, the situation is fluid,” Diokno said in an online briefing last Thursday.
Diokno earlier projected inflation might remain within the target range of 2 to 4 percent as long as oil prices remained below $95 per barrel.
During the Monetary Board’s first policy meeting this year in the middle of February, it raised the inflation forecast this year to 3.7 percent from 3.4 percent made during last December’s meeting.
The forecast for 2023 was also slightly raised to 3.3 percent from 3.2 percent previously, with one of main reasons being the rising global oil prices.
Earlier, the interagency Development Budget Coordination Committee said on Thursday that P3 billion will be released by the government to assist workers in the transport sector, as well as farmers and fisherfolk, that are affected by rising oil prices.
In a statement, the DBCC—composed of the heads of the National Economic Development Authority, Department of Finance, and Department of Budget and Management—said it is closely monitoring the factors affecting the oil prices in the country.
“Given recent developments, the government remains ready to provide targeted relief assistance and support to address the impact of the oil price hike for affected sectors, especially Public Utility Vehicle (PUV) drivers, farmers, and fisherfolk,” it said.
Based on the Bangko Sentral ng Pilipinas’ latest assessment as of Feb. 17, 2022, the Dubai crude oil price for this year is projected to
average at $83.3 per barrel. Nonetheless, this is expected to decelerate to $79.0 by the end of this year based on the latest oil futures.
“To assist the transport sector, the government is preparing to release P2.5 billion for the Fuel Subsidy Program of the Department of Transportation. This aims to provide fuel vouchers to over 377,000 qualified PUV drivers who are operating jeepneys, UV express, taxis, tricycles, and other full-time ride-hailing and delivery services nationwide,” DBCC said.
In addition, the Department of Agriculture has a budget of P500 million for assistance through fuel discounts to farmers and fisherfolk who either individually own and operate agricultural and fishery machinery or operate through a farmers’ organization or
cooperative.
Inflation in January 2022 eased to a 15-month low of 3 percent from 3.2 percent a month ago, pulled down mainly by lower increases in the prices of housing, water, electricity, gas, and other fuels.
Based on a more recent base year 2018, inflation in January was also significantly slower than the 3.7 percent a year ago. This was also the slowest inflation since the 3 percent in November 2020.
Erguiza said Russia’s invasion of Ukraine is a global concern especially as oil demand has gone up due to the opening of the economy and increased vaccination.
He said energy demand increased but production has not coped with the demand. The energy official said DOE asked Congress to amend the Oil Deregulation Law and suspend the implementation of excise tax once oil prices hit $80 per barrel as early as five to six months ago.
“The Lower House heard it thrice and they came out with a TWG report, but they went on recess so it’s still pending in Congress,” Erguiza
said.
He urged oil firms to give discounts to consumers in the wake of the high oil prices and a lot responded.
“While we are in this situation, we avoid unnecessary travels. Because of Ukraine and Russia tensions, generally we don’t have a problem in supply, but we will be hit by the high prices,” he said.
Effective 6am Tuesday, oil firms raised the price of gasoline by P0.90 per liter, diesel by P0.80 per liter and kerosene by P0.75 per, the ninth consecutive weekly oil price increase since the start of the year.
On February 22, the oil companies hiked the prices of domestic oil products. Gasoline increased by P0.80 per liter, diesel by P0.65 per liter, while kerosene has risen by P0.45 per liter.
These resulted in the year-to-date adjustments to stand at a total net increase of P8.75 per liter for gasoline, P10.85 per liter for diesel and P9.55 per liter for kerosene.
