The inflation rate in the third quarter rose faster to 6.2 percent from 4.8 percent a quarter ago, driven mainly by rising food and energy prices, the Bangko Sentral ng Pilipinas said Friday.
The figure brought the average inflation rate in the first three quarters of the year to 5 percent, well over the upper end of the government’s target range of 2 percent to 4 percent in 2018.
“Inflation pressures during the review quarter were attributed mainly to rising food and energy prices. Similarly, core inflation increased to 4.7 percent, higher than the rates posted in the previous quarter and a year ago,” the central bank said during the inflation report for the third quarter released Friday.
The inflation rate in September accelerated to a nine-year high of 6.7 percent from 6.4 percent a month ago.
The regulator said latest baseline forecasts using the 2012-based CPI series showed that average inflation was likely to exceed the upper end of the target range in 2018 and 2019, even as inflation was expected to revert to within the target in 2020.
“However, the implementation of non-monetary mitigating measures, particularly the approval of rice tariffication, could temper further price pressures and thus lead to an earlier return of inflation to within the target range in 2019,” the Bangko Sentral said.
Meanwhile, inflation expectations have also remained elevated amid indications of second-round effects.
It said with persistent signs of sustained and broadening price pressures, and the balance of risks skewing to the upside, the successive increases in the policy rate during the quarter were undertaken to further anchor inflation expectations and to safeguard the inflation target over the policy horizon.
The Monetary Board on Sept. 27 raised the policy rates by another 50 basis points to 4.5 percent amid persistent signs of sustained and broadening price pressures. The interest rates on the overnight lending and deposit facilities were likewise increased accordingly.
The 50-basis-point hike was the fourth upward adjustment this year, bringing the total rate hikes to 150 basis points since May 2018. The board in May and June raised the rates by 25 basis points each, followed by a rare 50-bps on Aug. 9.
The economy grew 6.3 percent in the first six months of 2018, well below the official target range of 7 percent to 8 percent, as the slower-than-expected growth of 6 percent in the second quarter offset the 6.6-percent expansion in the first quarter.
Economists blamed the accelerating inflation rate, the closure of Boracay island and some mining companies, as well as trade imbalance and anemic agriculture output to the lackluster performance in the first semester.