November inflation could surpass 8%
The Bangko Sentral ng Pilipinas (BSP) recently said that November’s inflation rate could possibly surpass 8 per cent as an after-effect price shocks, and the impact of Tropical Storm Paeng.
BSP Governor Felipe Medalla said that inflation likely quickened further to 7.8 percent in November from a 14-year high of 7.7 percent in October.
“Our forecast of inflation for the month (November) is 7.8 (percent) still. But because our forecast errors use plus or minus four, we’re not ruling out let’s say 8.2 (percent),” Medalla said.
“There are still large shocks that are there and in some of the shocks already inviting second order effects like adjustments of transport prices, adjustment of electricity rates,” the BSP chief said.
Medalla added that the aggressive rate hikes delivered by the US Federal Reserve have somewhat addressed high inflation in the US.
“Rates are not expected to have those jumbos 75 (basis points). So it’s a good sign because that means the pressure on the exchange rate is now practically gone because the peso and other currencies have appreciated,” Medalla said.
After plunging to its all-time low of P59 against the US Dollar, the local currency is bouncing back strongly to P56 to $1
Mid-November the BSP implemented another huge 75-basis-point hike in an effort to cushion the economy from external headwinds and exchange rate fluctuations that could entrench price pressures and potentially dislodge inflation expectations.
From January to October this year, inflation averaged at 5.4 per cent breaching the BSP’s two to four percent target range.
