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Food, oil to stoke June inflation

Food, oil to stoke June inflation thumbnail
Food, oil to stoke June inflation
The Philippine Statistics Authority (PSA) will report official inflation data on Thursday. Latest forecasts show that prices have definitely picked up faster than the 2.5% pace clocked in June 2017. — BW FILE PHOTO

By Melissa Luz T. Lopez, Senior Reporter

INFLATION likely clocked in faster in June on the back of rising food and oil prices coupled with a weaker peso, economists said in a BusinessWorld poll, with some noting that another rate hike may still be on the table for the central bank to temper prices.

A poll among 12 economists yielded a median inflation forecast of 4.7% for the month, which if realized will pick up from May’s 4.6% climb to a fresh high in at least five years. This also falls in the middle of the 4.3-5.1% estimate range given by the Bangko Sentral ng Pilipinas (BSP) Department of Economic Research last Friday.

The Philippine Statistics Authority (PSA) will report official inflation data on Thursday. Latest forecasts show that prices have definitely picked up faster than the 2.5% pace clocked in June 2017.

Food, oil to stoke June inflation

Michael L. Ricafort, economist at the Rizal Commercial Banking Corp. said the major inflation drivers last month were elevated world crude oil rates, a weaker peso-dollar exchange rate, as well as higher prices of sugar and rice in the local market.

Food inflation reached 5.5% in May, with a faster pace tallied in the provinces at 5.6% versus the 4.5% year-on-year increase in Metro Manila, according to PSA data.

The analysts pointed out that inflation may be approaching its peak, in line with the BSP’s forecast that prices will see its fastest climb within the third quarter. However, second-round effects of the tax reform law by way of higher transport fares and wage hike petitions are seen to drive costs up within the second half of 2018.

“Prices of basic commodities, especially oil, haven’t tapered yet. Also with the depreciation of the peso, imports are getting more expensive,” added Mitzie Irene P. Conchada, associate dean at the De La Salle University School of Economics.

The peso has been trading at the P53 level versus the dollar since June 11 to mark a sustained depreciation at a fresh 12-year low. An economic bulletin from the Finance department showed that the peso has depreciated by 7.42% against the greenback year-to-date, the second-worst performer in the region next to the Indian rupee’s 7.46%.

A handful of market observers believe that the sustained peso weakness will prompt further interest rate hikes from the BSP despite the back-to-back increases announced in May and June.

“If the peso continues to depreciate significantly in early August, we may see the BSP hiking again on their Aug. 7 meeting. That seems to be a major consideration in their policy decisions lately,” said Emilio S. Neri, Jr., lead economist at the Bank of the Philippine Islands.

Rising inflation expectations could also prompt the BSP to raise benchmark rates anew, according to Security Bank Corp. economist Angelo B. Taningco.

Others, however, said the central bank may be done with its tightening moves for now.

“Moving forward, if global oil prices continue to be well-behaved from hereon, inflation might even come down to below the 4% levels towards yearend and in this regard, we don’t expect any more BSP rate hikes for 2018,” said Ildemarc C. Bautista, vice-president and head of research at the Metropolitan Bank & Trust Co.

The BSP expects full-year inflation at 4.5%, well beyond its 2-4% target.


7 Comments on "Food, oil to stoke June inflation"

  1. Duncan Idaho on Sun, 1st Jul 2018 5:36 pm 

    lots of men, few women–
    but it is Asia

  2. Makati1 on Sun, 1st Jul 2018 6:22 pm 

    They accurately report inflation here, unlike in the Us. The Us changes how they calculate inflation to keep the numbers low, but reality is a different thing there. According to the 1990 way, the Us inflation is about 6% per year vs the ‘new’ way at about 3%. If you use the 1980 way, it is about 10% per year. A much more realistic number if you eat or buy gasoline or actually live there.

    The Peso:USD exchange rate has kept me above inflation here. “…the peso has depreciated by 7.42% against the greenback year-to-date,…” That gave me an average of about 7% increase in my spending power (PPP).

    Business World (bWorld) doesn’t mention the new taxes and the change in import laws here since last year, which have both increased prices overall. But then, BW is a ‘Western’ propaganda site and total truth is not required nor expected.

    BTW: Duncan, have you ever been to Asia? I have not noticed a lack of women here. “Region-wise sex ratio : Asia : 104.8 (males to 100 females)”. “Philippines: 100.28 men and 99.72 women.” No a big difference.

    Now I await the usual attack by the schoolyard bully and his sock puppet.

  3. MASTERMIND on Sun, 1st Jul 2018 7:06 pm 


    How would you know how many woman were around? Your dick fell off many decades ago..


  4. Makati1 on Sun, 1st Jul 2018 7:14 pm 

    When will you celebratory your 12th birthday MM? or are you only nine now? Sounds like it.

    You really need help. I am sure there are some free mental health clinics nearby.

  5. Makati1 on Mon, 2nd Jul 2018 3:20 am 

    American food is safe! Really?

    “Aaack! New Analysis Shows Superbugs Lurking on Three-Fourths of U.S. Supermarket Meat”

    “A new analysis offers alarming findings as many Americans get ready to fire up their grills for the 4th of July—nearly 80 percent of supermarket meat was found to have antibiotic-resistant bacteria, also known as superbugs.

    That’s according to the Environmental Working Group (EWG), which sifted through over 47,000 tests of bacteria on supermarket meat, including beef, chicken, pork, and turkey, undertaken by the National Antimicrobial Resistance Monitoring System in 2015, the most recent year for which the data is available.”

    Slip slidin’…

  6. Makati1 on Mon, 2nd Jul 2018 3:27 am 

    But! But! I thought only 3rd world countries had massive child poverty?

    “105,000 of Iowa’s children live in poverty — and it hasn’t gotten better in years, a new study says”

    “Iowans young and old are impacted by poverty in Iowa. Nearly 13,000 Iowans experienced homelessness in 2015 and one in five children don’t get enough to eat. Learn more in this video. Daniel Finney/The Register”

    Slip slidin’…

  7. Makati1 on Mon, 2nd Jul 2018 3:30 am 

    “More Americans are considering cutting their ties with the US — here’s why”

    “Americans are renouncing citizenship at a steady rate, thanks to laws that were put in place earlier this decade.”

    Leave now! Avoid the rush! LOL

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