THE country’s inflation rate is expected to peak during the fourth quarter of this year, revising the earlier pronouncement of the government that inflation will peak in the third quarter, the Bangko Sentral ng Pilipinas (BSP) said.
Monetary Board Member Felipe M. Medalla said, at a news conference called on Tuesday by the Development Budget Coordination Committee (DBCC), “So, measured properly, which is the change of the price level from one month to next, it should peak by the beginning of the fourth quarter.”
Medalla explained that based on his own estimates, year-on-year inflation is still seen to be on the higher level this month, as opposed to a month-on-month comparison, wherein the inflation level is expected to have already have weakened its momentum.
“My own assessment is it will be more or less the same but it cannot be ruled out that it will go down, [it] will go up. To be precise, month-on-month is almost certainly going to be lower. But year-on-year, there’s no guarantee that it will be lower,” he added.
He said the policy-making body of the BSP may not need to hike rates should the growth in the month-on-month levels of the country’s inflation slow down.
“If the month-on-month slowed, it’s not necessary to do [a rate hike]. But we should be open to raising rates if necessary,” he said.
The DBCC on Tuesday reported that it has adjusted its inflation forecasts upward for 2018 to 4.8 percent to 5.2 percent; and for 2019, to 3.0 percent to 4.0 percent.
In July the DBCC reported that its inflation forecast for 2018 and 2019 would hit 4.0 percent to 4.5 percent.
Meanwhile, the inflation forecasts from 2020 to 2022 have been retained at 2.0 percent to 4.0 percent, with the DBCC saying that it is consistent with the government’s assessment that inflation will go back to the target level by next year.
On monetary policy, the BSP has raised policy rates by a cumulative 150 basis points since May 2018 to anchor inflation expectations.
For September the country’s inflation print soared to a new nine-year high at 6.7 percent, bringing year-to-date inflation at 5 percent. This is higher compared to the inflation recorded in August 2018 of 6.4 percent, as well as the September 2017 inflation of 3.4 percent.
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