Bangko Sentral ng Pilipinas Governor Benjamin Diokno said there is a possibility the inflation rate in October breached the 5-percent level from 4.8 percent a month ago on higher prices of oil, electricity and some food items, and weaker peso.
Diokno said in a statement the October inflation likely settled within the 4.5 percent to 5.3 percent range.
“The BSP projects October 2021 inflation to settle within the 4.5-5.3 percent range. Inflation will be driven largely by the upward adjustments in domestic oil prices. Higher Meralco electricity rates, increased fish and fruits prices, and the peso depreciation will provide additional upward pressures,” he said, referring to Manila Electric Co.
But he said these could be offset partially by the decline in rice and meat prices, reflecting the arrival of pork imports.
“… BSP will continue to closely monitor emerging price developments to help ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” he said.
The last time inflation settled above the 5-percent level was in December 2018 at 5.1 percent.
Inflation in September slightly eased to 4.8 percent from 4.9 percent a month ago, on the back mainly of lower annual increases in transport and food prices.
The September inflation was still a lot faster compared to the 2.3 percent a year ago but within the 4.8 to 5.6 percent estimate for the month of the Bangko Sentral ng Pilipinas. The figure brought the average inflation from January to September at 4.5 percent, still over the target range of 2-4 percent this year.
The Monetary Board in September maintained the record-low policy rate of 2 percent in a move to support economic recovery and with the expectation that inflation will remain manageable in the coming months.
Diokno in his speech Friday during the closing ceremony of the 2021 National Statistics Month said inflation was kept low and stable at an average of 2.6 percent in 2020 because of the decisive and prompt monetary policy actions that kept financial markets functioning and the system liquid.
“While the inflation path is seen to remain above the target range of 2–4 percent up to October 2021, it is expected to decelerate to within the inflation target range of before the end of the year as the non- monetary measures of the government will help moderate the impact of supply bottlenecks,” Diokno said.
He said BSP will continue to support to the economy for as long as necessary to ensure the country’s strong and sustainable economic recovery.
The BSP will also remain vigilant against any emerging risks to the outlook for inflation and growth and will adjust its policy settings as needed, he said.