The Bangko Sentral ng Pilipinas (BSP) said the country’s inflation rate is moving in a decelerating path as expected and will be closer to two percent, which is the low end of the target range, in the next months.

On Tuesday, Nov. 5, the BSP said the October inflation of 2.3 percent — although higher than September’s 1.9 percent — is as expected and “consistent with the BSP's assessment that inflation will continue to trend closer to the low end of the target range over the succeeding quarters.”

“This reflects easing supply pressures for key food items, particularly rice,” it added.

The government announced Tuesday that inflation for the month of October rose to 2.3 percent because of higher food prices, particularly rice, and non-alcoholic beverages.

The BSP had estimated that inflation for the month of October will settle between two percent and 2.8 percent, more than September’s actual 1.9 percent. As of end-October, inflation averaged at 3.3 percent.

Price pressures in October were mainly due to the higher prices of food items such as vegetables, fruits, and fish. The increase in domestic oil prices and peso depreciation also added to upward price pressures.

However, these upward price pressures were offset by reduced rice and meat prices as well as lower electricity rates.

During its last policy meeting on Oct. 16, the BSP announced its latest risk adjusted inflation forecast for 2024 of 3.1 percent, after assessing that price pressures remain manageable. The risk-adjusted inflation forecast for 2025 is also revised to 3.3 percent and 3.7 percent for 2026.

So far, the BSP’s Monetary Board has reduced the policy rate by a combined 50 basis points (bps) in August and October.

The current target reverse repurchase (RRP) rate is at six percent. The interest rates on the overnight deposit and lending facilities is at 5.50 percent and 6.50 percent, respectively.

The BSP said the balance of risks to the inflation outlook for this year and in 2026 are leaning more towards the upside because of potential changes to electricity rates and higher minimum wages in areas outside Metro Manila. However downside factors will come from the impact of lower import tariffs on rice.

Overall, the BSP expects inflation to stay within the target range of two percent to four percent while inflation expectations continue to be well-anchored, providing the BSP with enough reasons to engage in a “less restrictive monetary policy” amid potential and emerging upside risks to inflation such as geopolitical issues.

The next Monetary Board policy meeting – the last one for 2024 – is on Dec. 19.