ADB pegs Philippines’ full-year 2018 inflation to 5%

Inflation will outpace the government’s target for the full-year 2018 due to the recent surge in food prices, the Asian Development Bank (ADB) said Wednesday.

“With the current policy measures in place, we are projecting around 4 percent next year from 5 percent this year,” ADB country director for the Philippines Kelly Bird said in a press conference in Pasig City.

Inflation has been accelerating in recent months. It surged to 6.4 percent last August, the fastest in over nine years, and brought inflation to 4.8 percent in the first eight months of 2018.

Higher prices of rice, energy, and transport were mainly responsible for the country’s soaring inflation, prompting the central bank’s policy-setting Monetary Board to raise interest rates thrice so far this year.

“There’s a surge in food price inflation and that’s what we’re seeing,” said Bird, noting the 8.2 percent food-alone index in August—from 6.8 percent in July and 3.1 percent in August 2017.

The impact of recent policy measures of implemented by the BSP may be felt next year and should bring inflation back to the government’s target in 2019, Bird noted.

“What the government’s doing now will have a significant downward pressure on inflation,” he said.

“At the top end of the target level, at this stage, is a good estimate where it may fall (in 2019). By early next year, we should have a better understanding of inflation dynamics,” said Bird.

The Monetary Board is scheduled to meet on Thursday, September 27, to decide if current conditions warrant a change in policy settings. —VDS, GMA News