High inflation to linger until year-end

CEBU, Philippines — The year may be nearing to an end already but not the soaring prices. Consumers may see further price pressures as the holiday season picks up in the coming weeks.

Cebuano economist Fernando Fajardo projected that inflation in the last quarter will remain elevated.

"I believe inflation will be higher in next three months of the year," said Fajardo, an economics professor at the University of San Carlos.

He also pointed out the rising inflation has been aggravated by "the contractionary effect of higher excise taxes" on fuel.

Aside from fuel, prices of basic goods like rice have also been increasing.

Fajardo blamed the National Food Authority and Department of Agriculture for their failure to maintain stable supply of the staple.

In a statement yesterday, the Bangko Sentral ng Pilipinas said inflation averaged at 6.2 percent in the third quarter, from 4.8 percent in the same period last year.

"Inflation pressures during the review quarter were attributed mainly to rising food and energy prices," the central bank said.

Price growth in September soared to 6.7 percent, its highest in almost a decade.

The BSP hiked its benchmark interest rate for four straight policy meetings this year to combat inflation, bringing it to 4.5 percent from 3 percent.

It also raised its inflation outlook this year to 5.2 percent and 2019 to 4.3 percent.

The BSP noted the implementation of non-monetary mitigating measures, particularly the approval of rice tariffication, could temper further price pressures and thus lead to an earlier return of inflation to within the target range of 2-4 percent in 2019. Meanwhile, inflation expectations have also remained elevated amid indications of second-round effects.

"With persistent signs of sustained and broadening price pressures, and the balance of risks skewing to the upside, the successive increases in the policy rate during the quarter were undertaken to further anchor inflation expectations and to safeguard the inflation target over the policy horizon," the BSP noted.

Amid continued uncertainty in the external environment, the BSP is closely monitoring recent fluctuations in the foreign exchange market and how the sustained pressures on the peso could affect inflation expectations and spill over to the demand side.