INFLATION in August likely exceeded the Philippine central bank’s target as prices of food staples and utility rates rose, Governor Benjamin E. Diokno said on Tuesday.
The consumer price index probably rose by 4.1% to 4.9% last month, faster than the 2-4% target of the Bangko Sentral ng Pilipinas (BSP), he told reporters in a Viber group message.
“The BSP will continue to monitor emerging price developments to help ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” he said.
If realized, price increases would have been much faster than the 2.4% a year earlier and 4% in July, when inflation was within target for the first time this year.
“Higher prices for liquefied petroleum gas (LPG), Meralco (Manila Electric Co.) electricity [rates] and key food items along with the depreciation of the peso are sources of upward price pressures during the month,” Mr. Diokno said.
The Philippine Statistics Authority will release August inflation data on Sept. 7.
Oil companies increased LPG prices by P3.27 to P3.35 a kilo or by as much as P37 for an 11-kilogram cylinder effective Aug. 1 according to Energy department data. Auto LPG prices also rose by P1.85 to P1.87 a liter.
Meralco said the overall rate for the month increased by P0.0965 per kilowatt-hour (kWh) to P9.0036 from P8.9071 in July on higher transmission charges.
Mr. Diokno also cited the weak peso, which had been moving around the P50-per-dollar mark in recent weeks, although it slightly appreciated due to muted activities amid tighter restriction measures in August due to a new wave of coronavirus infections.
It weakened by P1.737 or 3.49% against the dollar to P49.76 on Tuesday from its P48.023 finish on Dec. 29.
On the other hand, falling domestic oil and rice prices could offset inflation, Mr. Diokno said.
Based on the Energy department’s price monitor, oil companies this month cut the prices of gasoline and diesel by about 95 centavos a liter, while kerosene prices fell by P2 a liter.
Prices have increased by P12.45 a liter for gasoline, P9.35 a liter for diesel and P7.40 a liter for kerosene this year.
At its Aug. 12 policy review, the central bank raised its inflation forecast for the year to 4.1% from 4%, as it expects inflation to breach this year’s target. It also increased its inflation forecast for 2022 and 2023 to 3.1% from 3%.
BSP Deputy Governor Francisco G. Dakila, Jr. said their higher inflation forecast took into account higher global crude and nonoil prices, the weaker peso and concerns about slow pork imports.
Inflation in the seven months through July was 4.4%, higher than the BSP’s 2-4% goal.
Faster price increases in the previous months had been blamed on low pork supply amid an African Swine Fever outbreak. The government has imposed lower tariffs for pork, while increasing the minimum access volume threshold for these products.
The Monetary Board kept the key policy rate at 2% at its last meeting, citing the need to support the economy after renewed coronavirus lockdowns amid a fresh surge in infections probably due to a more contagious Delta variant.
It will meet again on Sept. 23 to review the policy settings. — Luz Wendy T. Noble