The Bangko Sentral ng Pilipinas said Monday inflation rate in October likely exceeded 7 percent, faster than the four-year high of 6.9 percent in September, on transport fare hikes, higher fuel prices and weaker peso.
It said in a statement the October inflation would likely settle within a range of 7.1 percent to 7.9 percent. The Philippine Statistics Authority will release the official inflation data later this week.
“Inflation pressures for the month are expected to emanate from transport fare hikes, elevated domestic petroleum prices, higher agricultural commodity prices due to recent typhoons and the depreciation of the peso,” the BSP said.
“This could be offset in part by the reduction in electricity rates for Meralco-serviced areas, lower LPG prices and reduction in prices of fish,” it said.
It said inflation would gradually slow down in the succeeding months as the cost-push shocks due to weather disturbances and transport fare adjustments dissipate.
“Looking ahead, the BSP will continue 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.
The onslaught of typhoon Karding in September in Luzon resulted in P1.29 billion worth of damage on the agricultural sector. The Department of Agriculture said at least 82,158 farmers and fisherfolk were affected, with volume of production loss at 72,231 metric tons and 141,312 hectares of agricultural areas.
Meanwhile, initial DA estimates showed that typhoon Paeng that struck over the weekend caused P49.54 million in damage and losses to agriculture. The DA’s Disaster Risk Reduction and Management Operations Center on Sunday said 1,949 hectares of agricultural areas in Luzon and Western Visayas were affected.
Rizal Commercial Banking Corp. chief economist Michael Ricafort told Manila Standard in an email that storm damage could have led to some temporary increase in the prices of food and other agricultural commodities and impact overall inflation until supply chains normalized.
Ricafort said this was “a pattern seen in recent years during the typhoon season in the country”.
“There would also be relief, reconstruction, reparation, rebuilding and other rehabilitation activities in hard-hit areas by the storms that could offset any economic output/productivity losses in those areas,” he said.
Ricafort also said October inflation would likely reach 7.1 percent and would start to ease gradually starting the first quarter of 2023 on higher base/denominator effects.
Inflation in September rose to 6.9 percent from 6.3 percent in August, driven by faster increases in food and non-alcoholic beverages.
The September outturn was the fastest since 6.9 percent in October 2018 during the rice crisis.
Inflation also averaged 5.1 percent in the first nine months, above the government’s target range of 2 percent to 4 percent for the year.
Private sector economists surveyed in September reported a higher mean inflation forecast for 2022 at 5.5 percent, compared to 5.4 percent in the August survey.
The Monetary Board, the policy-making body of Bangko Sentral ng Pilipinas, raised on Sept. 22 the overnight borrowing rate by 50 basis points to 4.25 percent to rein in the elevated inflation and support the value of the peso.
The move came following an earlier 75-basis-point hike by the US Federal Reserve to tame the persistently high inflation in the world’s biggest economy. The Fed is expected to announce another rate adjustment later this week.