Core inflation and second-round effects are major economic factors to watch out for in the Philippines, an executive of the International Monetary Fund (IMF) said.
In a hybrid briefing on Friday for the release of the lender’s Regional Economic Outlook (REO), Shanaka Peiris, division chief of Regional Studies of the IMF’s Asia and Pacific Department, said the rate of price increases remains higher than the government’s 2 to 4 percent target since breaching the target band some months ago.
Peiris said the elevated inflation rate is among the factors for the continued hikes in the Bangko Sentral ng Pilipinas’ key policy rates, which he said is projected to increase further in the coming months.
Monthly inflation surpassed the government’s target band since April when it posted an annual rate of 4.9 percent from the previous month’s 4 percent.
It took a breather in August when it decelerated to 6.3 percent but posted a big jump to 6.9 percent the following month, the highest since October 2018.
Average inflation in the first nine months this year stood at 5.1 percent.
Core inflation, which excludes volatile food and oil items, slowed to 4.5 percent in September from 4.6 percent from the previous month, bringing the nine-month average to 3 percent.
Peiris said second-round effects are also something to watch out for, referring to the effects of the elevated inflation rate on wages and transport fares.
Philippine monetary authorities said second-round effects are among the things they are monitoring, given the petitions for an increase in minimum fare.
“In the region, second-round effects are actually quite common from high commodity prices or even high headline inflation,” Peiris said. (PNA)