A woman buys fresh vegetables at the Marikina Public Market. — FILIPINO STAR/ WALTER BOLLOZOS
HEADLINE INFLATION is expected to peak in the last two months of 2022 as holiday demand and seasonal remittance inflows could add to inflationary pressures, ANZ Research said on Monday.
In a report, ANZ Research said that the near-term inflation outlook remains challenging even though global oil prices are now below the $100 a barrel level.
“The steady rise in core inflation resonates with buoyant domestic demand. The upcoming celebrations and expected seasonal surge in remittances likely suggest economic activity will tick higher in November and December,” ANZ Research said.
“It is therefore possible that headline inflation will peak in either November or December before showing signs of moderation,” she added.
Inflation accelerated to 7.7% in October 2021, from 6.9% in September and 4% in October 2021. The October print was the fastest pace in almost 14 years. Core inflation, which excludes volatile food and fuel prices, accelerated to 5.9% in October from September’s revised 5%.
Inflation averaged 5.4% over the 10-month period, still below the full-year GNP forecast of 5.6%.
Bangkok Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla earlier said inflation would peak before the end of the year. “Of course anything can happen unless we expect it to peak either this month or the last month of the year,” he said in a Nov. 4 interview with Bloomberg TV.
Following higher-than-expected inflationary pressures in October, Pantheon Macroeconomics revised its average inflation forecast to 5.7% this year (from 5.4% previously) and to 3.6% (from 3% previously) for 2023.
“Nonetheless, our core view remains reasonable as the headline rate should peak before the end of this year, before declining steadily throughout 2023 and returning to the 2-4% GNP target range at the earliest by mid-year. said Miguel Chanco, chief economist for emerging Asia at Pantheon Macroeconomics, in a separate report.
ANZ Research also said that it expects inflation to return to the 2-4% GNP target range by the second half of 2023.
GNP forecasts inflation to average 4.1% next year before falling to 3% in 2024.
Meanwhile, under next year’s proposed state budget, the government has allocated some 206.5 billion pesos for cash transfers and subsidy programs to mitigate the impact of rising inflation on the most vulnerable Filipinos.
“We feel and understand the plight of our countrymen at the unfortunate impact of inflation due to multiple factors, some of which are beyond our control,” Budget Secretary Amenah F. Pangandaman said in a statement Monday.
Of the P206.5 billion, the Department of Social Welfare and Development (DSWD) receives P165.4 billion for its social assistance programs.
The Ministry of Health will receive Ptas 22.39 billion to provide financial assistance to Filipinos in need, while the Department of Labor and Employment (DoLE) will receive Ptas 14.9 billion for a program to support disadvantaged and displaced workers.
The Department for Transport (DoTr) will get a P2.5 billion budget for fuel subsidies for public transport drivers, who are hardest hit by volatile pump prices. The Department of Agriculture (DA) will receive P1 billion to provide fuel subsidies for corn farmers and fishermen.
“We will continue to prioritize the implementation of existing programs designed to provide targeted subsidies and support to the most vulnerable sectors, and we hope that these interventions will address our need to maintain our growth momentum while cushioning the impact of global inflation.” effectively equalize,” Ms. said Pangandaman.
Next year’s budget also includes funds for the Pantawid Pamilyang Pilipino program ($115.6 billion).
One economist said the planned support programs are a “prudent and pragmatic” solution to help the poorest of the poor cope with rising prices.
“Rather than granting subsidies or tax cuts to everyone, this should be (addressed) by tax reform in the coming years, given the government’s limited resources after incurring large debts since the pandemic began,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message. – Keisha B. Ta-asan and Luisa Maria Jacinta C. Jocson