September inflation settling at 6.6 to 7.4 percent—BSP

A weakened peso and rising commodities prices and electricity rates could drive the September inflation between 6.6 to 7.4 percent, the Bangko Sentral ng Pilipinas forecasted Friday.

Last August, the country's consumer price index reached 6.3 percent after five consecutive months of acceleration.

The BSP said September inflation "is expected to be driven by the increase in electricity rates and prices of key food commodities, as well as by the depreciation of the peso."

During the intraday trading on 29 September, the Philippine peso touched P59:$1 from the P58.98 close on Wednesday.

"This could be partially offset by the decline in local fuel prices and lower meat prices. Looking ahead, the BSP will continue to monitor emerging price developments to enable timely intervention to prevent the further broadening of price pressures, following the BSP's price stability mandate," the BSP said in a statement Friday.

Still optimistic

Meanwhile, Finance Secretary Benjamin Diokno expressed optimism that the country's improving investment climate will enable the government to reach its medium-term goals.

"As we improve the investment attractiveness of our domestic economy, I am confident that we will be able to meet the growth targets indicated in our Medium-Term Fiscal Framework," said Diokno in a pre-recorded keynote during the "Inside ASEAN: The Philippines" forum organized by credit rater Moody's Investors Services.

The Inside ASEAN forum hosted discussions on the ongoing risks confronting the Philippines, such as inflation, rising energy prices, spillovers from the Russia-Ukraine crisis, and the country's economic recovery outlook, which investors graced along with corporates, issuers, and multilateral banks.

Recently, Moody's reaffirmed the country's Baa2 rating with a stable outlook, citing the resilience of the country's economic recovery to external pressures and the government's commitment to policy continuity.

The credit rater maintained that the country is not significantly exposed to geopolitical risks and is less dependent on external demand than Asia-Pacific peers, given its relatively large domestic market, which is further supported by stable remittance inflows from overseas Filipinos.

On the other hand, Diokno stressed that the Marcos administration would take advantage of existing structural reforms to attract beneficial foreign investments and create high-value jobs for Filipinos, including the Corporate Recovery and Tax Incentives for Enterprises Act and amendments to the Public Service Act, Retail Trade Liberalization Act, and Foreign Investments Act.

He said that the government would also pursue the remaining tax reform packages of the former Duterte administration. Among these are the Real Property Valuation and Assessment Reform Bill and the Passive Income and Financial Intermediaries Taxation Bill.

Moody's said that the government's commitment to policy reforms helps assure gradual fiscal repair following a reversal of the strengthening of the government's fiscal and debt metrics due to the pandemic.

"We are ready to build a stronger and greener economy for the 21st century. We have the right people at the helm, and we have a clear, focused plan to make this lofty goal happen," said Diokno.