INFLATION could be as high as 8.5 percent between now and June, according to the regional chief economist of the global lender HSBC on Tuesday.

Fred Neumann told reporters in a briefing at the Manila Peninsula Hotel the average inflation of 6.5 percent in March was not yet the end of the tunnel. “The consumer-price index (CPI) of the Philippines will likely peak at 8 percent to 8.5 percent by around the end of the second quarter.” 

Some 52 percent of the Philippine CPI is allotted to food. This had skewed the CPI largely because a huge majority of Filipinos spent at least half of their income on food since the rise in prices, especially of rice.

Neumann said markedly increased demand, not supply restrictions, is driving inflation higher in most countries, the Philippines included.

In the case of oil, for example, the elevated price of the commodity was driven by increased demand from such countries as India and China, in contrast to the 1970s supply shocks when the Organization of Oil-Producing Countries (Opec) resorted to supply restrictions, he said.

He also said per-capita consumption of rice in the Philippines has risen rapidly on the back of strong economic growth, aided in no small measure by some hoarding tendencies.

Because the pressure is on the demand side, Neumann said the pressure for inflation to rise should prove longer-lasting and more persistent than in the past. “There is little evidence to prove supply disruptions are causing prices to soar.”

Because of increased inflationary pressures, Neumann said the Bangko Sentral ng Pilipinas (BSP) was seen to tighten its policy stance and raise its overnight interest rates by as much 75 basis points this year. At present, they stand at 5 percent for borrowing and 7 percent for lending.

Neumann also said growth measured as domestic product was seen averaging up to only 5.5 percent this year or lower than last year’s 7.3-percent clip.

Domestic demand, increased fiscal expenditures, more investments and higher private consumption were cited as growth drivers this year.

HSBC Philippines chief executive officer Mark Watkinson said a growth of 5.5 percent should be a “remarkable achievement already for the Philippines” considering the global slowdown.

He added the forecast growth already incorporates the interest rate hike the BSP was seen to implement in the latter part of the year.   

HSBC: Inflation could reach 8.5%

INFLATION could be as high as 8.5 percent between now and June, according to the regional chief economist of the global lender HSBC on Tuesday.

MILITANT groups on Tuesday filed before the Ombudsman a complaint against officials of the National Power Corp. (Napocor) and the Wholesale Electricity Spot Market (WESM) for alleged price manipulation.

SANDIGANBAYAN sheriffs backed by policemen on Tuesday failed to locate former justice secretary Hernando Perez, his wife Rosario and brother in law Ramon Arceo, who were ordered arrested by the antigraft court on graft, extortion and other charges.

EIGHT out of the 24 hospitals that perform kidney transplantation in the country have violated the law that limits the number of such procedure done on foreigners, the Department of Health (DOH) said.

CITY OF MALOLOS—Several security guards and a mining operator in Bulacan on Tuesday filed several cases against retired Maj. Gen. Jovito Palparan and several others before the Provincial Prosecutor’s Office in this city.

THE National Police is closely coordinating with the Judiciary the turnover of confiscated firearms that have been submitted as evidence in court for the possible use of its members.

A COURT martial ordered on Tuesday the discharge from the service of five junior officers it found to have violated the Articles of War in connection with their participation in the Oakwood mutiny in Makati City almost five years ago.