NEDA: June's 5.2% inflation ‘unexpected’
MANILA, Philippines — The increase in prices of widely-used goods and services in June, the highest in five years, was “unexpected,” the country’s top socioeconomic planner said Thursday, adding that there may have been a “little bit of a slip in timing” in increasing policy rates.
At a press conference, Socioeconomic Planning Secretary Ernesto Pernia said the 5.2-percent rise in inflation in June was “unwelcome news.”
He added that inflation will likely peak in the third quarter of the year and taper off by October. “Rest assured that we will be on the forefront of monitoring inflation, and we will ensure that issues are addressed,” he said.
The inflation rate in June—which exceeded both government and market expectations—was the fastest pace in at least five years. Year-to-date, inflation averaged 4.3 percent, above the Bangko Sentral ng Pilipinas’ 2-4 percent target range.
In a statement, BSP Governor Nestor Espenilla said the higher-than-expected uptick in inflation last month was a “setback” amid claims that the central bank has fallen behind the curve on policy tightening and in containing inflation.
The BSP has introduced back-to-back rate hikes this year in a bid to fight inflation and strengthen the local currency. But analysts say more monetary policy actions are necessary to temper inflation.
“The BSP is behind the curve. Inflation accelerated past target, again. Meaning that it needs to do more to cool an overheating economy,” said Trinh Nguyen, senior economist at Natixis.
Following the release of June inflation data, the Philippine Stock Exchange index snapped its four-day rise Thursday after ending the trading session down 1.56 percent or 114.85 points to 7,233.57.
Meanwhile, the peso closed Thursday at P53.42 against the greenback, 6 centavos weaker than the P53.36-per-dollar finish on Wednesday.
Market watchers say the BSP will likely lift its benchmark rates again in August to tame inflation, as well as to help the country’s equity market and currency recover.
“The Philippine market succumbed after successive positive session,” Luis Limlingan of Regina Capital said in a market commentary.
“The implications pulled down the market further, with many already pointing to a third rate hike during the August 9 meeting. Even some have hinted that a 50 basis points hike is needed over the traditional 25 basis points,” he added. — with a report from BusinessWorld
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