January 29, 2023

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Inflation hits 14-year high | The Juan Kabayan

(UPDATE) INFLATION accelerated to a 14-year high of 8.0 percent in November, the Philippine Statistics Authority (PSA) reported on Tuesday, more than double that recorded a year earlier and up from October’s 7.7 percent.

While it did not breach the upper end of the Bangko Sentral ng Pilipinas’ (BSP) 7.4- to 8.2-percent forecast, the result put monetary authorities under pressure to keep raising interest rates. At 5.6 percent year to date, consumer price growth is well over the BSP’s 2.0- to 4.0-percent target.

The government on Monday acknowledged that 2022 inflation would exceed forecasts, revising this year’s outlook to 5.8 percent from 4.5 to 5.5 percent previously. This also indicated that inflation would likely go even higher in December.

Deputy National Statistician Divina Gracia del Prado told a briefing that an increase to as much as 8.5 percent this month would still allow the government to meet the full-year goal.

Headline inflation a year earlier was just 3.7 percent. Core inflation, which excludes price-volatile food and energy items, was also low at 2.4 percent. At 5.9 percent in October, the latter rate increased to 6.5 percent last month.

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Services and non-food items such as electricity, food and beverage services, and transport services were the main drivers of November inflation, del Prado told reporters.

Most key commodity groups registered price hikes, particularly food and non-alcoholic beverages (10 percent from 9.4 percent), which she said was “spillover effect” from the damage caused by recent storms.

In a statement, Socioeconomic Planning Secretary Arsenio Balisacan said targeted subsidies and discounts were being implement to “allay the impact of the higher prices of essential goods, especially for the vulnerable sectors and low-income earners of our society.”

The government is also continuing to implement measures to boost food production and reduce the cost of bringing farm produce to market, he added.

“We need to provide assistance, particularly to vulnerable groups, especially in times of high inflation. However, we need to improve our delivery mechanisms, particularly on the provision of ayuda (aid) to ensure that the aid reaches the right people in a timely manner,” Balisacan continued.

The BSP, whose policymaking Monetary Board is expected to raise key interest rates by as much as 50 basis points next week, expressed optimism that inflation would decelerate moving forward “due to easing global oil and non-oil prices, negative base effects, and as the impact of BSP’s cumulative policy rate adjustments work its way to the economy.”

“The risks to the inflation outlook remain tilted to the upside for 2023 but are seen to be broadly balanced for 2024,” the central bank said in a statement.

The Monetary Board will continue to assess the country’s inflation outlook and macroeconomic prospects when it meets on December 15, it added.

“The BSP remains prepared to take all further monetary policy actions necessary to bring inflation back to a target-consistent path over the medium term,” the central bank said.

“The BSP is also reassured by the timely implementation of non-monetary government measures to mitigate the impact of persistent supply-side pressures on inflation.”