Economist projects August inflation at 5.8%

By Kris Crismundo

September 2, 2018, 2:13 pm

MANILA -- A senior economist of IHS Markit expects that inflation in August further climbed from the five-year high rate of 5.7 percent in July.

IHS Markit Chief Economist for Asia Pacific Rajiv Biswas, in an e-mail, said price pressures are “finally peaking” last month, with inflation rate seen at 5.8 percent year-on-year.

“World oil prices have stabilized, with retail petrol prices edging just slightly higher in August,” Biswas said.

He added that price pressures are also expected to “moderate slightly” by the fourth quarter of the year and is projected to significantly drop by the first quarter of 2019.

“Overall, the CPI (consumer price index) should moderate slightly during Q4, with a significant decline in the year-on-year inflation rate by Q1 2019 as the TRAIN 1 (Tax Reform for Acceleration and Inclusion Package 1) indirect tax rises drop out of the year-on-year calculation of the CPI,” the economist noted.

Biswas added that with this development seen in the near term, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) is expected to keep the current key policy rates during its September meeting.

“With inflation pressures expected to ease during Q4 2018 and Q1 2019, the BSP has leeway to watch and wait to assess inflation pressures in coming months, rather than hiking policy rates further,” Biswas said. (PNA)