The Bangko Sentral ng Pilipinas (BSP) said July’s inflation rate was not the peak this year but officials insisted the highest the rate could go sometime in October would not be far from 12 percent.
The BSP had projected the inflation rate to peak at 12 percent sometime in October but the rate has actually gone beyond that in July, hitting a 17-year high of 12.2 percent.
But BSP Deputy Governor Diwa Guinigundo said yesterday that although the inflation rate has gone beyond 12 percent as early as July, the peak would not be seen until October.
“Our inflation path may continue at about the same levels since the additional inflation was brought about by the higher food inflation due to the shocks from the typhoons,” Guinigundo said.
Typhoons normally affect production in the country’s agricultural areas but the most immediate effect was to cause temporary disruption in distribution because transportation problems break the supply chain.
But these effects are temporary and according to Guinigundo, the effects of Typhoon Frank would eventually dissipate and the supply of agricultural products would normalize.
“We don’t expect these shocks to be permanent,” Guinigundo said.
Once supply normalizes, the BSP expects price pressures to ease and combined with the easing prices of oil in the world market, inflation pressure would also start to ease.
Guinigundo also argued that the impact of the BSP’s interest rate hikes on inflation expectations could not be understated, since these would have an immediate effect on how high prices would go.
Adjustments in monetary policy rates normally take 18 months to filter through the economy but immediately, the level of the BSP’s key policy rates also affect the pricing decisions of manufacturers.
BSP managing director Cyd Amador explained that if producers expect the BSP to take aggressive measures to contain inflation, they would be more circumspect about increasing the prices of their products.
Meanwhile, newly-appointed Socioeconomic Planning Secretary Ralph Recto said yesterday the country’s inflation rate is likely to revert to single digit level next year as prices are now starting to stabilize.
“I don’t expect it to worsen. (Inflation) would still be double-digit this year but next year, prices are expected to stabilize already,” he told reporters.
Inflation rose to 12.2 percent in July, up from 11.4 percent in June, the highest in 17 years amid the rice in prices of basic commodities. July’s rate was above the 11.2 percent to 12 percent forecast of the central bank and “was the highest since December 1991” when the rate topped 13.2 percent, the National Statistics Office said.
Data showed that inflation for food, beverage and tobacco rose to 17.8 percent in July from 16.5 percent in June, while the figure for clothing rose to 4.5 percent from 4.2 percent, it said. — With Iris Gonzales