HIGHER power rates and liquefied petroleum gas prices as well as the impact of Typhoon Paeng on various commodities may have increased inflation to 8.2 percent in November, according to the Bangko Sentral ng Pilipinas (BSP).
In its month-ahead inflation forecast for November, BSP said inflation could settle within the range of 7.4 percent to 8.2 percent.
Inflation data for November will be released by the Philippine Statistics Authority (PSA) on Tuesday, December 6.
“Upward price pressures for the month are expected to emanate from higher electricity rates, uptick in the prices of agricultural commodities due to severe tropical storm Paeng, and higher LPG prices,” BSP said.
“The reduction in petroleum and pork prices as well as the peso appreciation could contribute to easing price pressures for the month,” it added.
However, BSP said, inflation is projected to gradually decelerate in the succeeding months as the impact of the typhoon and recent transport fare hikes dissipate.
Nonetheless, BSP said it will closely monitor price developments to ensure that the government can implement timely interventions to ease price pressures.
“The timely implementation of non-monetary measures will also help temper price pressures in the months ahead,” BSP stressed.
Earlier, inflation was identified by the International Monetary Fund (IMF) as one of the primary challenges faced by the Philippines.
The IMF thinks the BSP must be more aggressive in raising interest rates in the event that the situation worsens.
In the IMF Executive Board’s recently concluded 2022 Article IV Consultation with the Philippines, the Washington-based lender said should inflation worsen, they would recommend that the BSP respond with a tighter monetary policy stance.
Inflation in the Philippines, IMF said, is being fueled by the strong dollar, higher commodity prices, and tightening global financial conditions. IMF said high inflation has weakened the country’s external position and narrowed its fiscal space.