Sharp rise in fuel, rice prices seen jacking up August inflation

MANILA  -Headline inflation may have ended its six-month downslide and revved up to somewhere in the range of 4.8 percent to 5.6 percent in August, from 4.7 percent in July, according to the Bangko Sentral ng Pilipinas (BSP).

The Philippine Statistics Authority will announce by Sept. 4 the official readout for August in the rate of growth in prices of goods and services that households commonly purchase.

“Higher prices of rice and other agricultural commodities due to weather disturbances, sharp rise in fuel prices as well as increased transport costs owing to higher train fares and toll rates, and the peso depreciation are the primary sources of upward price pressures in August,” the BSP said in a statement.

“Meanwhile, lower electricity rates from major providers could contribute to downward price pressures for the month,” the central bank added.

Monthly inflation prints have been on a downtrend for six months in a row since reaching 8.7 percent in January.

READ:  Global price pressures threaten Philippine inflation downtrend

The BSP’s goal is to keep inflation at a full-year average of within the range of 2 percent to 4 percent.

On Aug. 30, Moody’s Analytics warned of a specter of a resurgence in prices of goods and services, especially of the volatile energy and food items.

In particular, the research firm said inflation fears were rising again following a decision of major crude oil producer Saudi Arabia to cut output. This move brought prices to $84 per barrel in recent weeks from as low as $74 in June.

Further, Moody’s Analytics said the upward changes in international prices of rice were more concerning.

Amid dry weather in India and Thailand, the price of the staple grain averaged at $550 per ton in June from $440 at the start of this year. In the latter part of August, daily prices reached as high as $629 per ton.

READ: Global food security at crossroads as rice shortages and surging prices hit the most vulnerable

Moody’s Analytics said all of Asia would be susceptible to higher food prices if this trend should continue. Developed economies in the continent would be more affected because they import most of their rice, but also some emerging economies that have the same predicament.