Forecast November rate to rise further to 8.2%, but decelerate gradually after
The rate of inflation, which hit an almost 14-year high of 7.7 percent in October, could rise further in November before gradually declining in the succeeding months, the Bangko Sentral ng Pilipinas (BSP) said Wednesday.
The BSP said November inflation could go from a range of 7.4 percent to 8.2 percent, driven mainly by higher power rates and increases in the prices of agricultural products due to the damage caused by typhoon “Paeng” and higher prices of cooking gas.
On the other hand, cuts in the price of gasoline and pork, as well as the peso’s appreciation, could ease price pressures for the month, moving inflation toward the lower end of the BSP estimate of 7.4 percent.
The BSP’s Department of Economic Research said inflation is expected to gradually decelerate in the succeeding months as the effects of weather disturbances and transport fare hikes dissipate.
It said the “timely implementation of non-monetary measures” will also help ease 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 said.
On Tuesday, President Ferdinand Marcos Jr. said the government is working to slow down the rise in fuel and power costs at least heading into Christmas, saying Filipinos have already suffered much from the spiraling prices of goods amid worldwide inflation.
In a press conference in Los Banos, Laguna, the President admitted he was worried by the temporary restraining order (TRO) issued by the Court of Appeals (CA) that could raise electricity rates for millions of customers of the Manila Electric Co. (Meralco).
“We are focusing our work on not raising the price of fuels, at least for this Christmas. If we could postpone and slow down the increase of prices, making the rise slower and keep the prices of fuel down, and if it rises at least gradually. It’s very difficult—the people have suffered much” Mr. Marcos said in Filipino.
Earlier, the International Monetary Fund said the BSP must respond with a tighter policy stance if inflation continues to accelerate in the coming months.
This was contained in the recent conclusion of the 2022 Article IV consultation with the Philippines by the IMF’s executive board.
The IMF said BSP’s prompt action to fight inflation was welcome, but further monetary tightening might be needed to keep inflation expectations well anchored.
“The current policy stance remains accommodative, and BSP should aim at bringing the policy rate close to the neutral real rate to securely bring inflation within the target range. Should inflation pressures continue to rise, the BSP should respond with a tighter policy stance,” IMF said.
“Similarly, if inflation proves less persistent, or if significant downside risks to growth materialize, monetary policy tightening would need to be recalibrated. Clear communication about inflation and the BSP’s policy intentions can help reduce uncertainty and improve policy transmission,” it said.
On Nov. 17, 2022, the policy-setting Monetary Board of the BSP raised the benchmark policy rate by 75 basis points to a near 14-year high of 5 percent in a bid to rein in inflation and support the peso.
October’s high rate brought the 10-month inflation average to 5.4 percent, well over the target range of 2 to 4 percent earlier set by the government.
On Wednesday, various groups marched and gathered in Manila on Bonifacio Day to protest the effects of the “cost-of-living crisis.”
Bagong Alyansang Makabayan (Bayan) Secretary General Renato Reyes Jr. said in a statement that their group joined Filipino workers in demanding a substantial wage increase and for government action to stem the rise in prices.
“The holiday cheer has already been dampened by the shrinking basket of goods that the ordinary Filipino can afford given the insufficient wages and soaring prices,” he said.
Reyes called on the President to issue a public statement regarding wage hikes.
“Is he for or against a substantial wage increase? Is he for or against an increase in the salaries of public sector workers? Will he push through with new taxes amid rising inflation?” he said.
“There are very urgent issues that require a clear and categorical response from the chief executive.”
Also on Wednesday, the Philippine Egg Board Association said recent increases in the price of eggs could be traced to bird flu, low production, and an increase in feed prices.