Philippines: Inflation surges in August - ING

Joey Cuyegkeng, Senior Economist at ING, notes that Philippines inflation soared further to 6.4% in August on the back of a sustained surge in prices of basic food items, alcoholic beverages and tobacco and transport services.

Key Quotes

“Core inflation continues to rise with a rate of 4.8% in August from 4.5% in May and only 2.2% last December.”

“The August inflation rate exceeded forecasts including that from the central bank which projected a range of 5.5% to 6.2%.”

“We expect inflation to remain elevated for the rest of the year with next month’s inflation rate likely to remain above 6% and full-year average inflation at 5.1%, significantly higher than the  target range of 2% to 4%.”

“The central bank needs to contain run-away inflation expectations and demand pull pressures.”

“The chances of another aggressive monetary policy action have increased as inflation has surged. Another 50 basis point policy rate hike at the 27 September meeting is a real possibility.”