Inflation seen staying at 6% in Q3 before easing

The rate of increase in the prices of basic goods might remain at about 6 percent in the third quarter of 2022, but is expected to ease during the remainder of the year as an expected slowdown of the global economy could push down oil prices, according to First Metro Investment Corp. and University of Asia and the Pacific (UA&P).

“The United States will likely fall into shallow recession while China eked out a slim 0.4-percent gross domestic product growth in the second quarter of 2022, bolstering this view on crude oil prices,” First Metro and UA&P said in their latest market report.

Further, they expect the Philippine peso to enjoy a temporary respite at the foreign exchange markets for the remainder of this year as remittances from overseas-based Filipinos flow in and as the US dollar weakens.

“We see the peso depreciation to boost income of some 70 million Filipinos and offset likely softer consumer spending due to the elevated inflation,” the two partners said.

Meanwhile the National Economic and Development Authority (Neda) said the release of targeted subsidies to the most vulnerable Filipino families will cushion the impact of elevated prices of oil and other commodities.

The Neda was referring to the release by the Department of Budget and Management of a P4.1-billion second tranche fund for the government’s Targeted Cash Transfer (TCT) Program.

“The timely release of the fund is crucial in the government’s efforts to help the poor cope with the continuous rise in commodity prices due to external shocks and other factors,” Economic Planning Secretary Arsenio Balisacan said in a statement.

Balisacan said the TCT program was an important intervention to protect the purchasing power of the poor, which is among the priorities of the Marcos administration’s eight-point socioeconomic agenda.

“Our near-term goal as envisioned in our eight-point agenda is to safeguard Filipinos against the most pressing issues today, which are rising inflation and the lingering socioeconomic scarring caused by the COVID-19 pandemic,” he added.

The Neda chief noted that the second tranche will benefit over four million beneficiaries, who will receive P500 each per month for two months. The Department of Social Welfare and Development (DSWD) is tasked to distribute the cash subsidy.

At this leg of the program, the DSWD will also provide P500 per month for two months. Distribution will be made through remittance centers, special disbursing officers and the Land Bank of the Philippines.

—Ronnel W. Domingo