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Analysts predict that inflation will reach 7% in September.

According to experts, the country’s inflation rate likely increased in September 2022 after declining the previous month in part because of higher food and electricity prices.

The Standard Chartered Bank economist for Asia and the Philippines, Jonathan Koh, predicted that the rate of price increases in the domestic economy would post a faster rate of 7 percent in the ninth month this year, higher than the 6.3 percent last August in a report for the economic outlook for Oct. 1–7.

According to Koh, increasing prices for food and transportation, as well as higher electricity rates, are anticipated to accelerate inflation.

“A low base effect and rising fish and vegetable prices in September may have boosted food inflation,” he said.

Super Typhoon Karding’s effects “also certainly led to rising food costs amid supply-side disruptions,” according to Koh.

He mentioned the Manila Electric Co.’s service areas’ monthly increase in electricity rates of 4.1%. (Meralco).

He also said that the increase in gasoline prices was a factor in the anticipated rise in transportation costs.

Koh claimed that the hike in the minimum fare for public transportation would further lower the inflation rate as of October 2022.

“Overall, the central bank is expected to remain hawkish and continue on its hiking path,” he continued. “Inflation in the Philippines is rising and spreading.”

According to the chief of sales of Regina Capital Development Corporation (RCDC), Luis Limlingan, the country’s inflation rate will reach 6.8 percent in September 2022.

According to him, another justification for further increases in the Bangko Sentral ng Pilipinas (BSP) key rates might be the anticipated acceleration of the inflation rate.

Limlingan, however, chose not to provide information regarding when and how much the BSP may likely increase its key rates again.

He continued, “(This) hinges on inflation and the Federal Reserve’s (Federal Reserve) next action.

In addition to the nation’s high inflation rate, BSP officials said they must modify the major policy rates of the central bank to address the local currency’s depreciation. The local currency rebounded on Tuesday after touching another record-low of 59.00 on Monday.

According to Limlingan, the oil exporting nations’ decisions to reduce their supply also have a significant impact on inflation projections and the central bank’s key rate decisions.

Michael Ricafort, chief economist of Rizal Commercial Banking Corporation (RCBC), predicts that last month’s inflation rate increased to 6.8% as a result of lower base effects, a weaker peso, the effects of “Karding” on several food items like rice, corn, and vegetables, as well as higher electricity prices in Meralco-serviced areas.

However, it is anticipated that these variables would be offset by the decrease in local fuel prices brought on by the same international changes.

However, he noted that the increase in the minimum fare for public transportation could affect the inflation rate in October 2022.

According to him, inflation “may still peak in October 2022 at about 7 percent and could technically ease thereafter.”

The average inflation rate for the first eight months of this year was 4.9 percent, which is higher than the target range of 2-4 percent set by the central bank. The highest monthly rate so far was 6.4 percent, recorded in July of last year.

Ricafort stated that the BSP’s key rates are anticipated to be increased once more “as supported by generally robust economic indicators” due to expectations for further acceleration of the domestic inflation rate.

The impact of BSP rate increases on the domestic economy is anticipated to be mitigated by the economy’s ongoing recovery, according to several statements made by local monetary authorities.

According to Ricafort, other factors influencing the anticipated rises in the BSP rates in the upcoming months include currency fluctuations and the US Federal Reserve’s key interest rates continuing to grow.

To lower the rising US inflation/CPI (consumer price index), he continued, “More local policy rate hikes are still possible, if needed, as a function of any subsequent Fed rate hikes.”

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