Inflation,

Come October, surging world crude prices fuelled inflation as they rose to three-year highs. Prices hovered around $80 per barrel, spurring moves to postpone the second tranche of additional fuel taxes under TRAIN due last Jan. 1, with some solons even calling to repeal the provision of the law altogether. This became moot as oil rates recovered by November.

But this was not before the government approved fare hikes for public jeepneys and buses, only to recall the former after just a few weeks.

Costs of consumer goods finally simmered down as inflation eased to six percent in November, but not before the BSP launched a “proactive” 25-bp hike to douse fears of rising prices altogether. It finally paused from hiking rates at its December meeting. Now, benchmark rates range from 4.25-5.25%, with the key rate of 4.75% the highest since 2009.

The central bank delivered successive rate hikes to fulfill its mandate of price stability, but these responses aren’t as potent when used as a cure for supply constraints which are beyond their reach.

In June, monetary officials soon realized that they can’t be the only soldiers on this war on skyrocketing costs and called for backup by way of “coordinated” efforts from other state agencies.

“In short, monetary policy is not the only solution; non-monetary intervention can go a long way towards addressing inflation pressures especially in the face of strong supply shocks,” the BSP told BusinessWorld.

Just last month, however, the DoF went on to pin some blame on bank economists for “off-themark” forecasts by saying that they contributed to rising inflation expectations, much to the bewilderment of these analysts who were simply talking numbers.

Most market watchers now stand convinced that inflation will continue tapering off, with more growing confident that the rate will be back to below four percent in 2019. The BSP even slashed its 2019 inflation forecast to 3.2% in December, saying they are much more “comfortable” that price increases will ease to their desired pace.

And indeed, interventions seem to be working as inflation has tapered, as predicted. Headline inflation eased significantly to 5.1% in December, putting 2018 headline inflation at an average of 5.2% — matching the full-year estimate of the central bank, but still higher than the 2.9% rate logged in 2017 and the 2-4% target.

How soon this decline will benefit the poor and the hungry is another matter.