LST | Digital transactions affect inflation in the Philippines by 0,02%, but a downward trend of inflation to reach 2-4% | Singapore | August 2, 2022 — With a likelihood of 94.15%, inflation in the Philippines can be foreseen using the trend in digital transactions. The fluctuations in inflation rate correlate with the volume of monthly digital transactions two months prior. A change in the monthly digital transactions by at least 1% has triggered the short-term change in inflation in the Philippines by 0.02% on average over the past three years.
The pandemic forced the increase in the supply of money in the country. Digital transactions, already seeing an increasing demand, experienced additional growth. The country experienced a “boost” in the money turnover, followed shortly by an increase in short-term inflation.
On average from January 2020 to May 2022, the inflation rate was at its max in May, and its lowest in January and February
“Despite the short-term fluctuations in inflation, there is a downward trend aiming to reach 2-4% in the long-term. This is the target milestone set by the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) as the optimal benchmark for its monetary policy. The current spike in annual inflation is still within these margins, likely being a seasonal occurrence”, Robocash Group analysts commented.
Robocash Group operates in the Philippines through its online alternative lending service Digido, as well as BNPL service UnaCash and the first Philippine medicine aggregator UnaPharma.