Inflation rate in August likely eased slightly to 6.3 percent from 6.4 percent in July ago on lower oil prices, an economist said Tuesday.
“The rollback in local fuel pump prices since July 2022 could still be felt into early August 2022, as global oil prices eased to four-month lows, thereby could still help ease inflation and inflationary pressures in the coming months,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said in an emailed response to Manila Standard’s query.
Ricafort said lower prices of other global commodities such as wheat at new 6-month lows “could also help ease inflationary pressures, going forward”.
He said second-round inflationary effects after higher minimum wages and minimum transport fares since June and July could still lead to higher prices of other goods and services such as sugar.
Ricafort said the petitions for higher minimum jeepney fares to P15 from P11 and for higher taxi flag down rates to P60 from P40 could lead to additional inflationary pressures in the coming months.
Inflation could still peak by October at below 7 percent and ease in the succeeding months, he said.
“Thus, further local policy rate hikes could still be possible for the coming months, as supported by generally strong economic data, also as a function of future Fed rate hikes as well as the behavior of the peso exchange rate,” he said.
Inflation in July accelerated to a 45-month high of 6.4 percent from 6.1 percent in June, driven by faster increases in the prices of food, non-alcoholic beverages and higher transport fares.
This brought the average inflation in the first seven months to 4.7 percent, above the target range of 2 percent to 4 percent.
The Monetary Board, the policy-making body of Bangko Sentral ng Pilipinas, on Aug. 18 raised for the fourth time this year the benchmark interest rate by 50 basis points to 3.75 percent to tame the accelerating inflation.
This brought the total policy rate increase this year to 175 basis points. The BSP kept the policy rate at a record low of 2 percent for the entire 2021 to support the economy’s recovery.