Gov’t increases 2022 inflation rate forecast again, now at 4.5 to 5.5 percent

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MANILA, Philippines — The national government has increased its inflation rate forecast for 2022 again, with the Development Budget Coordination Committee (DBCC) announcing that it is now at 4.5 percent to 5.5 percent.

Budget Secretary Amenah Pangandaman made the announcement during a briefing on Friday afternoon, saying that the adjustments were still due to the Russia-Ukraine conflict and other supply constraints.

On May 26, the DBCC under former president Rodrigo Duterte stated that inflation targets were around 3.7 percent to 4.7 percent, which is already higher than the 2.0 percent to 4.0 percent range kept by the Bangko Sentral ng Pilipinas (BSP) in January.

READ: Gov’t raises inflation forecast to 3.7%-4.7% in 2022 | BSP keeps ’22 inflation target… for now 

“On macroeconomic assumptions: the DBCC also approved the following revisions to the macroeconomic assumptions based on emerging data.  The average inflation rate assumption for 2022 remains elevated and is projected to range from 4.5 to 5.5 percent, following the uptick in prices of fuel and food as a result of the ongoing Russia-Ukraine conflict and disrupted supply chains,” Pangandaman said.

“It is slightly adjusted to 2.5 to 4.5 percent for 2023, and is seen to return to the target range of 2.0 to 4.0 percent by 2024 to 2028,” she added.

The data that Pangandaman was referring to was a table presented by DBCC, where Dubai crude oil is currently priced at around US$90 to $100 per barrel, and Peso-Dollar exchange rates at P51 to US$1.

DBCC made the prediction that inflation numbers would hover between 2.5 percent to 4.5 percent by 2023 based on expectations that the price of Dubai crude oil would be around US$80 to US$100 per barrel.

Inflation rate is expected to be lower from 2024 to 2028, as Dubai crude oil prices may be between US$70 to US$90.

“Meanwhile, the assumption for the price of Dubai crude oil is set at USD 70 to 90 per barrel for 2024 to 2028 as oil supply is expected to catch up and stabilize over the medium-term,” Pangandaman said.

Recently, the Philippine Statistics Authority (PSA) said that the country’s headline inflation rate for the month of June reached 6.1 percent, which was a three-year high since October 2018’s 6.9 percent.

PSA’s report published last Tuesday stated that inflation figures for June 2022 were higher than both the 5.4 percent recorded in May 2022 the June 2021 figures which was at 3.7 percent.

The higher inflation rate was brought by higher annual growth rate in the prices of food and non-alcoholic beverages which saw a rise from 4.9 percent in May 2022 to 6.0 percent in June 2022.  Transportation costs meanwhile rose from 14.6 percent in May 2022 to 17.1 percent in June.

READ: Inflation for June 2022 hits three-year high of 6.1 percent — PSA | May inflation rate heats up to 42-month high of 5.4% 

However, President Ferdinand Marcos Jr. disagreed with the PSA report that placed inflation rates for June at 6.1 percent, saying that the country is not yet at a level “that high.”  Marcos Jr. said their expectations were just around four percent.

READ: Bongbong Marcos ‘disagrees’ with PSA report of 6.1 inflation rate in June 

JPV