BSP sees prices reaching peak in August, September

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FILE PHOTO. The rise in prices of widely-used goods will likely be at its fastest pace in August or September, a central bank official said.

Metro Manila (CNN Philippines, August 16) — The rise in prices of widely-used goods will likely be at its fastest pace in August or September, a central bank official said.

Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo on Wednesday said inflation rate will reach its highest mark in the third quarter before tapering off next year.

"We expect inflation to peak by around the third quarter, this quarter probably August or September, and then from there expect this to start coming down to around 3.7 in 2019 and 3.2 percent in 2020," he said during a Senate joint hearing on the price impact of the tax reform law.

Last month's inflation rate rose to 5.7 percent--the highest in the last five years--from 5.2 percent in June.

He said the increase is attributed to higher oil prices in the global market, coupled by the impact of the TRAIN law and bad weather.

From up to $51 last year, the price of  Dubai crude has surged to $72 to $75 this year, Guinigundo said.

Every percent rise in global oil prices adds 0.03 percent to domestic inflation, he added.

"I think that 5.7 percent may also be largely due to the significant increase in oil prices, nagkataon na may TRAIN, and then you have oil prices and then the weather yun po yung driver ngayon ng inflation," he said.

Guinigundo, however, said the TRAIN law accounts for only 0.7 percent of July's inflation.

"Based on our computation, of the 5.7 percent inflation in July 2018, about .7 percentage points can be attributed to TRAIN. That's about 12.2 percent of 5.7 percent, but it is very difficult to track the indirect impact of TRAIN," he said.