MANILA – Inflation likely breached 6 percent in June, adding pressure on the Bangko Sentral ng Pilipinas (BSP) to hike interest rates more aggressively, economists said.
Of the 16 June inflation forecasts collected by the Inquirer last week, 10 were above 6 percent, and all were higher than the BSP’s projected full-year average of 5 percent. The last time that headline inflation hit the 6-percent mark was the 6.1-percent rate in November 2018, at the height of the rice crisis, which led to import liberalization.
The government will report on last month’s inflation rate on Tuesday.
Goldman Sachs Economics Research, HSBC Global Research, and Bank of the Philippine Islands’ Emilio Neri Jr. had the highest forecast of 6.1 percent. Neri attributed his projection to “higher power, petroleum prices and a weaker peso, which likely outweighed the decline in fish and LPG prices.”
The peso crossed the 55:$1 mark before last month ended.
Neri said consumers should brace for more upward inflationary pressures this month on the back of fare and wage hikes.
“Although the government already extended the lower tariff rates for pork, rice, corn and coal, this might not be enough to offset the rising prices in fuel and transport,” HSBC said.
China Bank’s Domini Velasquez, DBS’s Han Teng Chua, ING’s Nicholas Antonio Mapa, Rizal Commercial Banking Corp.’s Michael Ricafort, Security Bank’s Robert Dan Roces, Standard Chartered’s Jonathan Koh and UnionBank of the Philippines’ Ruben Carlo Asuncion forecast 6-percent inflation in June.
“The government’s initial response to domestic shortages in food supply—by importing more key food items such as meat, fish and corn—is now at risk with higher food prices worldwide and a weaker peso. Hence, we think inflation has not yet peaked and will continue its climb as producers continue to pass on their higher costs to consumers,” Velasquez said. (Ben O. de Vera ©Philippine Daily Inquirer 2022)
