Fri. Mar 29th, 2024
Philippines, South Korea In Grip Of Inflation, June’s CPI Based Inflation Reaches 6%

Consumer prices in South Korea sky-rocketed off-limits in June and quickened to 24-years-high, government data showed on Tuesday.
The consumer price index (CPI) advanced by 6 percent in June year-on-year, up from a 5.4-percent increase in May and surpassing the 5.9 percent expectations, according to a Reuters poll.

It was the quickest annual rise since November 1998. It also breached Korea’s central bank’s 2 percent target for 15 months.
On the monthly basis, the consumer price index increased by 0.6 percent, exceeding the expectation of a 0.5-percent rise as observed in the survey.

Also Read: Asia | South Korea: Inflation Outlook Reaches New High In 10-Years

Last month, the Bank of Korea (BOK) opined that it is seeing the inflation trajectory to be higher than previously done projections, adding that it would closely weigh debt repayment burdens to decide whether a half-percentage point interest rate hike in July should be done or not.

The BOK has announced a hike of 25-basis-point interest rate hikes five times since last August to 1.75 percent, topping the records since mid-2019. South Korea’s hawkish stance is in tandem with the global practice of policy tightening as central banks are putting effort into mitigating inflation.

It would be historical in S. Korea’s history if the bank announces a half-percentage-point interest rate increase in July.
The core CPI, stripping out volatile food and energy prices, increased by 3.9 percent year on year, the quickest increase since February 2009.

Philippines:

The Philippines, too, is in the grip of increasing price rates. There, inflation breached the highest level in nearly four years in June, signaling more interest rate hikes and an aggressive stance of the central government to moderate price pressures.

The consumer price index increased 6.1% in June year-over-year, exceeding the central bank’s inflation target band of 2%-4% for the third consecutive time. The increase in overall inflation was driven by higher transport and utilities’ costs, and food prices, according to the statistics agency.

The Philippine Statistics Authority has not declared the core inflation figures since they have changed their base year to the 2018 base year for finding out changes in consumer prices.

The inflation rate has come within the range expected by the central bank between 5.7%-6.5%.
Inflation in the first two quarters of 2022 averaged 4.4%.

The Bangko Sentral ng Pilipinas (BSP) may also mull over a steep interest rate hike to back a weak Philippine peso and tame inflation. Governor Felipe Medalla cleared that the central bank will not be obliged to match policy tightening by the U.S. Federal Reserve.

An analyst at Security Bank in Manila named Robert Dan Roces suggested the BSP’s Monetary Board “could contemplate a one-time, preemptive 50 basis points policy rate rise when it meets on Aug. 18 if inflation’s upside risks remain persistent” in a statement before the release of the June inflation statistics.

By raising interest rates by 25 basis points back-to-back in May and June, the BSP tightened its monetary policy to combat inflationary pressures.
Inflation may increase as a result of the peso’s decline, which would also impact consumer purchasing power.

 

By Harshita Sharma

I bring to you updates from business, policy and economy spectrum.

Leave a Reply

Your email address will not be published. Required fields are marked *