By Lee C. Chipongian
The Bangko Sentral ng Pilipinas (BSP) said inflation rate for the month of October may have decreased further to 0.5 percent from September’s 0.9 percent because of lower oil prices.
The government will release the October inflation data on Tuesday, November 5.
In a statement Thursday, the BSP’s Department of Economic Research (DER) said they expect October inflation to settle within the range of 0.5 percent to 1.3 percent.
“The increases in electricity and water rates as well as higher prices of LPG and selected food items are seen as the primary sources of upward price pressures for the month,” according to the DER.
The central bank is looking at a low of 0.5 percent inflation since the consumer price index “could be tempered by lower domestic oil and rice prices.”
“The BSP will remain watchful of evolving inflationary conditions to ensure that the monetary policy stance remains consistent with the BSP’s price stability mandate,” said the DER.
For the first nine months, inflation averaged 2.8 percent. For the full year, the BSP forecasts 2.5 percent.
Based on the latest Private Sector Economists’ Inflation Forecasts survey of the BSP, analysts see inflation settling at 2.7 percent for 2019 because of bad weather, higher pork prices and global oil prices volatility, among others.
BSP Governor Benjamin E. Diokno has said that over the near term, the inflation upside risks continue to come from uncertainties arising from global oil price volatility and the potential impact of the African Swine Fever outbreak on local prices.
To provide stimulus and offset these upside risks, the BSP cut interest rates by 75 basis points (bps) this year and reduced the reserve requirement ratio (RRR) by a total 400 bps by the first week of December.
Benign inflation outlook continued in the third quarter with inflation decelerating to 1.7 percent compared to three percent in the second quarter and 3.8 percent in the first quarter. Last year’s third quarter inflation averaged at 6.2 percent after peaking at 6.7 percent in September and again in October 2018.