February 4, 2023

Filipino Guardian

Sentinels of Filipino Free Press

GNP sees December inflation up to 8.6%

A WOMAN buys vegetables at a market in Quiapo, Manila. — PHILIPPINE STAR/EDD GUMBAN

HEADLINE INFLATION is likely to have settled in the 7.8%-8.6% range in December on higher electricity tariffs and rising food prices, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.

“Price pressures for the month are expected to come from higher electricity tariffs, rising agricultural commodity prices, higher meat and fish products and higher LPG (liquefied petroleum gas) prices,” the BSP said in a statement.

GNP forecast range for next month suggests inflation may have been faster than the 14-year high of 8% in November.

The upper end of the forecast or the 8.6% would also be the fastest pace since the 9.1% print during the global financial crisis in November 2008.

If the 8.6% forecast is realised, this would bring average full-year inflation to 5.9%, or slightly above the 2022 average GDP forecast of 5.8%.

December would be the ninth straight month in which inflation exceeded GNP’s target range of 2-4%.

GNP Gov. Felipe M. Medalla said earlier this month inflation could peak in December before easing in January.

Electricity tariffs and LPG prices rose in December adding to inflationary pressures.

Manila Electric Co. (Meralco) increased the overall price for a typical household by P0.3297 to P10.2769 per kilowatt-hour in December.

The price of LPG products also increased by P2.25 per kilogram and AutoLPG by P1.26 per liter in December, marking the second consecutive month of price increases.

Vegetable, meat and fish prices continued to rise due to rising input costs and agricultural damage caused by recent weather disturbances.

Supply shortages have pushed the price of red onions up to 600 pesos per kilo this month, prompting the agriculture department to introduce a suggested retail price of 250 pesos per kilo of red onions.

“Meanwhile, the fall in oil and rice prices and the appreciation of the peso could help ease price pressures for the month,” the BSP said.

In December, pump price adjustments amounted to a net decrease of P2 per liter for gasoline, P2.6 per liter for diesel and P3.9 per liter for kerosene.

On December 28, local well-milled rice ranged from 38 to 44 pence per kilogram.

The peso also continued to appreciate against the US dollar. The peso closed at 55.755p against the dollar on Thursday, up 0.8% or 0.465p from its close of 56.22p on Dec. 1.

“The BSP continues to closely monitor emerging price developments in order to be able to intervene in a timely manner, which could help prevent further expansion of price pressures in line with the BSP’s price stability mandate,” the central bank said.

Mr Medalla previously signaled further tightening as he aims to bring inflation down to 3% in the third quarter of next year and back to the 2-4% range by 2024.

He said the central bank could hike rates at its first two meetings in 2023.

The Philippine Bureau of Statistics is yet to announce the release date of the December inflation data. — Luisa Maria Jacinta C. Jocson