Benjamin Diokno
The rate of increases in prices of goods and services that the average Filipino household buys remains on a downtrend despite the uptick in August, but this may not be going down as low as previously expected.
Finance Secretary Benjamin Diokno, who sits at the Monetary Board (MB) as the national government’s representative, said the monthly inflation readout might no longer “overshoot” or go below the target range of 2 percent to 4 percent some time in the early part of 2024.
This possibility was in the radar of the MB and the Bangko Sentral ng Pilipinas a few weeks before the inflation data for August was released.
In a commentary issued on Sept. 4, Singapore-based DBS Bank noted that inflation prints in the Asia-Pacific region—particularly the Philippines, South Korea and India—are “showing signs of bottoming.”
“Administrative and fiscal measures are likely to be the first line of defense to fight food-related shocks, as easing core inflation prints allow monetary policy to bide time,” DBS said.
Hawkish rhetoric
“Most [central banks] are expected to stay on hold in the upcoming rate reviews but maintain their hawkish rhetoric and emphasise that they stand ready to tighten policy further, if required,” if added.
In a briefing with journalists on Friday, Diokno said that while there was a spike in the inflation rate for August, the continued decline in the year-to-date inflation rate showed the government’s continued effort toward addressing high inflationary pressures.
With the latest data, headline inflation was pegged at an average of 6.6 percent for the January-August period.
Stubborn inflation
Headline inflation averaged at 8.3 percent in the first quarter and 7.2 percent in the first semester.
“This suggests that we remain on track for the full-year average to be within the target in 2024,” Diokno said.
“However, the economic team acknowledges the emerging challenges given the inflationary uptrend, and will therefore address these obstacles as it remains committed to keeping the inflation rate within manageable levels to protect the Filipino people’s purchasing power while maintaining macroeconomic stability,” he added.
Diokno said that the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO)—led by the National Economic Development Authority, Department of Budget and Management and the Department of Finance—continues to monitor and anticipate developments of key commodities through the creation of an agricultural monitoring dashboard and use of science and technology in agricultural monitoring, evaluation and analysis.
In order to manage consumer expectations and avoid speculations in the market, the IAC-IMO is also pushing for coordinated and sustained communication from the government, highlighting the supply levels of rice and the progress of the specific measures identified in controlling the increasing rice prices.
The government will also accelerate its El Niño mitigation plan, Diokno said. INQ