Oil price spike after Saudi attack likely to hurt PH gains vs inflation

The country’s chief economist on Wednesday, Sept. 18, warned that a projected jump in global oil prices because of a sharp dip in production following an attack on Saudi Arabia was likely to hurt the Philippine government’s so far successful bid to tame inflation.

Socioeconomic Planning Secretary Ernesto M. Pernia, however, said he believed “it’s not going to be a long crisis.”

He said, though, that “it’s difficult to jump into something that may be premature” because government economists haven’t “done any simulation yet.”

Saudi, according to international news reports, vowed to act swiftly to restore oil production levels prior to the attack, which halved the output of the world’s biggest oil producer.

Pernia, head of the state planning agency National Economic and Development Authority (Neda), acknowledged that, in general, global oil prices have a big impact on local inflation.

If fuel prices rise as a result of the Saudi attack, “that’s really going to hurt our downward trend in inflation,” Pernia said on the sidelines of the Senate finance committee hearing on Neda’s proposed P9.97-billion 2020 budget.

According to the industry group Laban Konsyumer Inc., Dubai crude prices were rising from $58.29 per barrel last Monday, Sept. 16, to $64.03 per barrel on Tuesday, Sept. 17, and $66.90 per barrel on Wednesday, Sept. 18.

High oil prices had been among the reasons for a 5.2 percent inflation last year, highest in 10 years.

Pernia said he hoped inflation would slow to 1.4 percent. It fell to 1.7 percent in August, a 35-month low, which brought the average inflation to 3 percent, still within the government target of 2.4 percent./TSB