Inflation Hits 10-Year High in October

For October, inflation rose to 7.7% year-on-year as measured by the consumer price index, as reported by the Philippine Statistics Authority. This is faster compared to the previous month’s figure of 6.9%.

Claire Dennis Mapa, a national statistician, told reporters that the last time inflation breached this level was at the time of the Global Financial Crisis in early 2009. Currently, inflation is averaging at 5.4%, well above the annual target of the government of 2-4%.

The figure for October’s inflation fell in the projection bracket of 7.1 – 7.9% of the Bangko Sentral ng Pilipinas (BSP).

China Banking Corp’s Chief Economist, Domini Velasquez, has ascribed the accelerated inflation to increased prices of food and transportation fares.

“We expect non-food items to continue the same measured pace as the previous months due to the broadening of second-round effects, affecting transport fares and other services, such as restaurants and accommodation,” she says.

A combination of supply chain disruptions, a weak peso, skyrocketing fuel prices, and increased demand has pushed inflation faster within the pandemic with the effect, of weaker purchasing power for the Filipinos.

“Outside any other unanticipated shock, we think that inflation has likely peaked and we expect the rate of growth to slowly decelerate in the coming months until it reaches the BSP’s target of 4% by the second half of 2023,” says Velasquez.

On risks that could potentially push inflation up this year, Velasquez noted the government’s inability to tackle potential higher power rates, shortages, or increases in water tariffs.

Source: Philstar