Oil, pork prices being watched as possible inflation drivers

Prices of basic goods and services could start an uphill climb again next year, though slower than their pace in 2018, if projections of a rise in oil and pork prices, which the central bank called “challenges,” hold true.

At a press briefing, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said inflation forecast for 2020 was not as pretty anymore because of “volatility” in global oil prices and the potential impact of African Swine Fever, a deadly disease for pigs, on domestic food prices.

In technical terms, Diokno said the “inflation outlook” for 2020 “has shifted toward the upside,” meaning an increase, and “continued to tilt to the downside,” meaning a decline, for 2021.

He said monetary planners, though, still expect consumer price index to be within target, or even lower than the projected 3 percent from 2019 to 2022.

Current inflation rate stood at 0.9 percent as of September. The BSP had said the rate could increase a little as a normal effect of increased consumption during the holidays.

Movement of oil prices in the international market, caused by tensions in the Middle East, is also driving some local economists to warn that inflation may move upward in the coming months.

This is being aggravated by an ASF outbreak in the local hog industry which could butcher supply and drive prices up.

But regulators see no cause for alarm as pork is not an indispensable part of Fiipino diet.

At. his press briefing, Diokno also noted that the Philippine economy grew at a slower pace in the second quarter of 2019 compared to the last quarter of 2018.

Domestic private consumption was the primary growth driver during the quarter, with exports and government spending also contributing to GDP growth.

“Nevertheless, we expect growth to remain robust in the coming months,” Diokno said./TSB