NextGen Day

ANTIPOLO CITY – The recent surge in oil prices is believed to be a temporary anomaly. According to an industry expert, it is not expected to reverse the trend of softening inflation for the rest of the third quarter.

Fernando Martinez, chair of the Independent Philippine Petroleum Companies Association, explained that the significant increase in oil prices, which took effect on Tuesday, was a direct result of production cuts jointly announced by Russia and the Organization of Petroleum Exporting Countries (OPEC).

“The market is highly speculative. An announcement like the oil production cuts will surely trigger a reaction like a price increase,” he said in a Saturday interview.

Martinez also shared that another substantial increase in local pump prices is anticipated in the second week of August.

“The oil price increase will probably range somewhere between PHP3 to PHP4 per liter. However, I doubt if further increases will occur after that,” he added.

On August 1, local oil firms raised diesel prices by approximately PHP3.50 per liter, gasoline by PHP2.10 per liter, kerosene by PHP3.25 per liter, and liquefied petroleum gas by PHP4.55 per kilo.

Despite these temporary fluctuations, Martinez mentioned that international petroleum prices are predicted to decrease later this month due to lower demand from China, the world’s second-largest oil consumer.

“The destruction brought about by the typhoon (Egay) and unfavorable investor sentiment is expected to cause a slowdown in China’s demand for oil,” Martinez explained.

He also highlighted that, aside from fuel costs, food prices heavily influence the country’s inflation figures.

Meanwhile, Gregorio San Diego, chair of the United Broiler Raisers Association, expressed concern that despite ample domestic chicken production, continued importation in significant volumes counteracts upward price pressures.

While the current surplus may help control inflation in the short term, it may adversely affect local food producers, which is not conducive to the country’s long-term food security goals.

On Friday, the Bangko Sentral ng Pilipinas reported that headline inflation decelerated to 4.7 percent year-on-year in July from 5.4 percent in June, aligning with the central bank’s forecast range of 4.1 to 4.9 percent for the month.

This represents the fifth consecutive month of continuous decline in the country’s inflation since it peaked at 8.7 percent in January.

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