The Bangko Sentral ng Pilipinas said Thursday inflation rate in November likely slowed to as low as 5.8 percent from a nine-year peak of 6.7 percent in September and October, pulled down by lower oil prices and stable supply of rice.
The BSP Department of Economic Research said in a statement the November 2018 inflation likely settled within a range of 5.8 percent to 6.6 percent.
“The deceleration of inflation for the month could be attributed to the sharp decline in petroleum prices, the normalization of supply conditions in rice and other agricultural commodities, and the peso appreciation,” the Bangko Sentral said.
The peso strengthened to 52.5-per-dollar level in the past few weeks from as high as 54.3 a dollar in October. It closed at 52.45 against the greenback Thursday.
“These could be offset in part by the adjustments in jeepney and bus fares as well as higher electricity rates in Meralco-serviced areas,” the central bank said.
“Moving forward, the BSP will remain watchful of economic and financial developments to ensure the achievement of its primary mandate of price stability conducive to balanced and sustainable economic growth,” it said.
Inflation hit 6.7 percent in October, the same rate in September, bringing the inflation in the first 10 months to 5.1 percent, above the target range of 2 percent to 4 percent for the year.
The Monetary Board, the policy-making body of the Bangko Sentral, on Nov. 15 raised for the fifth time this year the benchmark interest rates by 25 basis points to 4.75 percent to temper inflation rate.
This brought the total increase in the policy rates this year to 175 basis points since May 2018. The interest rates on the overnight lending and deposit facilities were raised accordingly.
BSP Deputy Governor Almasara Cyd Tuano-Amador said the upside risks to inflation outlook remained amid the measures implemented by the government to make sure consumer prices were in check.
“While the latest inflation forecasts show inflation settling within the target band of 2 to 4 percent in 2019 and 2020, after considering the impact of non-monetary measures, including the Rice Tariffication bill and the suspension of the oil excise tax, the board raised the policy rate by 25 basis points given the upside risks to the inflation outlook,” Amador said.
The board also raised the average inflation forecast this year to 5.3 percent from the 5.2 percent estimate made in the September policy meeting. The forecast for 2019 was reduced to 3.5 percent from 4.3 percent, while the forecast for 2020 was also raised to 3.3 percent from 3.2 percent.
The Monetary Board is set to hold its last policy meeting for the year next month.