Inflation rate accelerated to 2.3 percent in September, the fastest in 18 months, on higher prices of food and non-food items, the Philippine Statistics Authority said Wednesday.
The National Economic and Development Authority said inflation rate in September climbed from 1.8 percent in August and 0.4 percent in September 2015.
The September inflation was the fastest since the 2.4 percent recorded in March 2015. This brought the average inflation rate in the first nine months to 1.6 percent.
“The increase in inflation can be attributed to the decline in production since August and the low base effect for non-food items,” said Neda officer-in-charge Rosemarie Edillon.
The September 2016 inflation was still within the forecast of the Bangko Sentral ng Philippines of 1.6 percent to 2.4 percent.
Food inflation climbed to 3.1 percent in September 2016 from 2.5 percent in the previous month following the adverse effects brought about by the series of tropical cyclones that devastated the country.
“Rice prices will remain stable since the 250,000 MT of rice imported from Thailand and Vietnam is expected to arrive by the end of October,” Edillon said.
The risk of La Niña phenomenon developing in the fourth quarter of 2016 was still looming over the country, according to the Philippine Atmospheric, Geophysical and Astronomical Services Administration.
“We must keep on strengthening the agricultural sector through a comprehensive agricultural development program that aims to increase the resiliency of the sector and create a balance in agricultural policy,” said Edillon.
Bangko Sentral nGovernor Amando Tetangco Jr. said the current monetary policy settings remained appropriatedespite the acceleration in inflation.
“Inflation for September at 2.3 percent was within our forecast range and brought year-to-date average to 1.6 percent. This outturn is consistent with our expectation that inflation will slowly inch up towards the national government target range over the policy horizon,” Tetangco said in a text message to reporters.
“This also confirms that at [the] moment there is no compelling reason to change settings in our policy rates,” Tetangco said.
Tetangco, however, said monetary authorities would continue to be on their toes and closely monitor developments both here and abroad.
He said these included financial market volatility and impact of possible adjustments to the tax structure on consumption patterns and relative prices of assets to see how these may be addressed by adjustment in any of Bangko Sentral’s other policy tools including macroprudential measures.
The sustained robust economic growth and manageable inflation environment prompted the Monetary Board of Bangko Sentral to maintain the prevailing interest rates in its latest meeting on Sept. 22.
The rates of 3.5 percent for overnight lending, 3 percent for overnight borrowing, and 2.5 percent for overnight deposits were maintained. The reserve requirement ratios of banks were also left unchanged.
The board’s decision was based on its assessment that the inflation environment remained manageable. Latest forecasts showed that average inflation was likely to settle slightly below the 2 percent to 4 percent target range in 2016 and rise toward the mid-point of the range in 2017.
The board reduced the inflation forecast this year to 1.7 percent from the previous estimate of 1.8 percent. The board, however, kept the estimates of 2.9 percent for 2017 and 2.6 percent for 2018.
Tetangco said while global economic conditions remained subdued, trends in domestic economic activity showed sustained firmness, backed by solid private household consumption and investment, buoyant business and consumer sentiment and adequate credit and domestic liquidity.
The economy grew 6.9 percent in the first half, near the upper bound of the Duterte administration’s target range of 6 percent to 7 percent this year.