Inflation likely accelerated at its fastest pace in more than nine years in August, data released by the Department of Finance (DOF) on Monday showed.
The department expects inflation to have settled at 5.88 percent in August, the fastest since it came in at 6.6 percent in March 2009.
“The driver of inflation is largely supply-side challenges which need to be addressed by improving productivity,” the DOF said in its economic bulletin.
Recent developments match the DOF’s inflation outlook, said Cid Terosa, dean of the University of Asia and the Pacific (UA&P) School of Economics.
“Prices of basic commodities and gasoline have pushed the inflation rate close to 6 percent,” Terosa told GMA News Online.
Food and non-alcoholic beverages are expected to have contributed 2.98 percentage points to inflation in August.
Consensus forecasts are at 5.9 percent with the BSP expecting it to range from 5.5-6.2 percent, First Metro Securities Brokerage Corp. said in its daily market commentary, Trading Signals.
“We believe that inflation will likely come in at the higher end of the range due to higher food, electricity, and fuel prices,” First Metro Securities said.
The latest forecast of the DOF is closely in line with the Bangko Sentral ng Pilipinas’ (BSP) inflation outlook of 5.9 percent, while the government has set a full-year target of 2 to 4 percent.
Terosa, however, sees inflation taking quite a different path after August.
“I feel that this is not yet the peak since shortages in many commodities ... have yet to be resolved conclusively and uncertainties in oil prices persist,” he said.
“Also, the ‘ber’ months can show brisk demand that can pull up prices and unfavorable weather conditions that can disrupt supply of commodities,” the economist said.
The Philippine Statistics Authority is scheduled to release its August consumer price index and headline core inflation report on Wednesday, Sept. 5, 2018. —VDS, GMA News