MANILA, Philippines — The country’s headline inflation may start to cool down only by the first quarter of next year at the latest, even after hitting a four-year high last month.
During the annual reception for the banking community late Friday night, Department of Finance chief Benjamin Diokno said the government is doing its best to address soaring inflation.
Diokno said inflation would decline soon. The headline rate rose to 6.9 percent in September, the highest in four years, as food prices continue to increase.
“We expect inflation to start tapering off by the last quarter of this year or at the very least by the first quarter of next year,” Diokno told reporters.
Inflation already averaged 5.1 percent during the nine-month period, almost near the upper end of the target for 2022 but Diokno remains confident that the rate will fall within the government’s assumptions.
“It will still be within range, our average inflation target for this year is 4.5 to 5.5 percent, it will still be there. We expect inflation to go back to the midpoint (of two to four percent) by 2024 so next year it will be around four percent,” Diokno said.
He noted that food prices will be the major factor that would help bring down inflation.
Food inflation has already climbed to 7.7 percent in September amid more expensive vegetables, fish, fruits, seafood, and sugar among others.
“We will increase output and import if necessary. But on oil, we don’t control the price of oil,” Diokno said.
The Organization of the Petroleum Exporting Countries (OPEC), a group of some of the world’s most powerful oil producers, recently decided to cut oil production in a bid to maintain high prices at $100 per barrel.
For a net importer such as the Philippines, such a move would impact domestic pump prices.
“Let us see what happens, whether they can sustain that. But admittedly, there’s really an impact on us because the basis of our projection is at $90 per barrel so anything higher than that would impact on inflation,” Diokno said.
Nonetheless, the Finance chief remains optimistic that inflation will soon stabilize especially as second round effects have already been addressed.
“When we talk of secondary effects, we’re talking of higher wages because workers might say prices are up and they will demand higher wages. We have already adjusted the minimum wage and under the existing rules, we will have no adjustment within the next 12 months,” Diokno said.
“Another secondary effect would be the increase in transport prices and we already increased that as well,” he said.
A recent survey conducted by Pulse Asia revealed that soaring prices of basic commodities remained the top national concern most Filipinos want the government to address immediately.