August inflation seen to hit 9-year high

MANILA, Philippines — Inflation in August may have breached the previous month’s level to reach a new nine-year high, according to separate projections made by the Department of Finance (DOF) and a lawmaker-economist.

In his latest economic bulletin, Finance Undersecretary and chief economist Gil Beltran said inflation may have settled at 5.9 percent in August, higher than the 5.7 percent recorded in July this year and the 2.6 percent posted in August last year, but in line with the estimate of the Bangko Sentral ng Pilipinas (BSP).

“The driver of inflation is largely supply-side challenges which need to be addressed by improving productivity,” Beltran said.

For Albay Rep. Joey Salceda, the August figure is expected to range from 5.8 percent to 6.1 percent. But he stressed the rate may have already peaked.

“A more cohesive strategy is needed to slay the inflation monster: you reap what you sow, if you don’t plant you don’t harvest,” he said.

The Philippine Statistics Authority (PSA) is set to release the official inflation figure today.

Salceda attributed the record high inflation to “supply difficulties” resulting from two weeks of “continuous rains” in the Luzon food basket, unabated increases in rice prices with weak intervention from the National Food Authority (NFA), and higher prices of fish, meat and chicken in the market, among others.

He also cited the rising prices of fuel, which have reached about P12 since January, the “weakness” of the peso against the US dollar, “not to mention that it might take 6-18 months for monetary action to gain traction in aggregate demand.”

“Unless we do more silly things, this should already be the peak in this inflation cycle,” he said, echoing the forecast made earlier by Speaker Gloria Macapagal-Arroyo.

Salceda, a Cabinet adviser during the Arroyo administration, said he expects inflation this month to settle at 5.8 percent and remain so until Christmas, and ease to 5.1 percent “average” for the whole year.  –  With Helen Flores