Inflation will hit above 7%

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“Increasing inflation will hit above 7% in the remaining months of 2018”, forecasted by Australia and New Zealand (ANZ) Research. The increased is accounted by the devastation brought by typhoon Ompong.

How does typhoon affects inflation?

Typhoon sieged at Cagayan Valley, Isabella, Central Luzon, and Cordillera Administrative Region which are main producers of vegetables and rice. Consequently, shortage of supply will thrive prices to increase.

According to ANZ Research, the actions of the government (see article here Government actions in increasing inflation) are non-monetary and monetary measures which are essential and positive to ease the demand and supply attributes of the ongoing inflation.

An action suggested to ease inflation

However,ANZ suggested that the Bangko Sentral ng Pilipinas (BSP) need to increase another 25 basis point at the last month of 2018. In the report of Business World, “the BSP officer-in-charge Deputy Governor Chuchi G. Fonacier said last week that policy makers are strongly committed to address the threat of high inflation.”

ANZ highlighted that the full-year inflation accounted by 5.1% is lower than the expected rate from various agencies and banks. BSP forecasted 5.2%, International Monetary Fund expects inflation at 4.9% this year, Capital Economics and Standard Chartered Bank predicted 5.5% and Fitch Solutions  proposes 5.3%.

What to expect?

Consumers will primarily expect increased agricultural commodities and will continuously face oil price hike as well. The peso weakened by 8% due to the price hike of oil.

Sources:
Business World: ANZ sees inflation hovering above 7% as storm damage stokes price pressures


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