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Ghosts of Inflation Past Lurk in Philippines As Russia-Ukraine Tensions Rise

Economists warn that if tensions between Russia and Ukraine escalate, prices of commodities in the Philippines may climb to unprecedented levels in 2022 due to rising global oil prices. An inflation rate as high as 6.7% and a 9% decrease in the peso in 2018 could haunt the Philippines again if the conflict worsens. Higher inflation would weaken economic recovery by reducing buying power as Filipinos pay more for oil and other impacted products and services.

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36 views1 page

Ghosts of Inflation Past Lurk in Philippines As Russia-Ukraine Tensions Rise

Economists warn that if tensions between Russia and Ukraine escalate, prices of commodities in the Philippines may climb to unprecedented levels in 2022 due to rising global oil prices. An inflation rate as high as 6.7% and a 9% decrease in the peso in 2018 could haunt the Philippines again if the conflict worsens. Higher inflation would weaken economic recovery by reducing buying power as Filipinos pay more for oil and other impacted products and services.

Uploaded by

Chelsea Dizon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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GHOSTS OF INFLATION PAST LURK IN PHILIPPINES AS RUSSIA-UKRAINE TENSIONS RISE

Economists warn that if tensions between Russia and Ukraine escalate, prices of commodities in the
Philippines may climb to unprecedented levels in 2022. Due to the geopolitical war, global oil prices
continue to rise, hitting $100 per barrel in certain markets, as Russia is a major oil producer and one of
Europe's largest natural gas suppliers. The Bangko Sentral ng Pilipinas (BSP), identifies $110 per barrel as
a possible turning point. Prior to the escalation of hostilities, the BSP revised its inflation projection for
2022 to 3.7 percent from 3.4 percent. Higher energy prices may now trigger a domino effect, putting
downward pressure on the Philippine peso.

“We had expected BSP to hike [interest rates] by the end of [the second quarter] but should this Russia-
Ukraine conflict devolve further, we could see the ghosts of 2018 come back to haunt us,” says ING Bank
Manila senior economist Nicholas Mapa on Thursday, February 24. The Philippines’ inflation rate
plumed as high as 6.7%, while the peso decreased 9% in 2018.

“A protracted period of elevated energy prices will definitely filter through to higher imported energy
inflation with the double whammy of fomenting peso depreciation pressure as firms need more dollars
to cover pricier oil. Transport and utility costs will likely rise,” Mapa adds.

According to Rizal Commercial Banking Corporation chief economist Michael Ricafort, higher inflation
"would hold down the economic recovery due to a fall in buying power or disposable income," as
Filipinos pay more for oil and other impacted products and services. Ricafort also suggests that the
Philippines must patronize renewable power sources to be able to overcome global oil price hike.

The possible implication of high inflation rate may force a lot of Filipinos to change their lifestyle due to
the increase of commodities. This means that they have lower disposable income that leads to having
less money and weaker purchasing power.

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