BANGKO Sentral ng Pilipinas on Friday said inflation in September likely accelerated to as high as 3.6 percent from 3.1 percent in August on higher price of fuel, weaker peso and increased power rates during the month.
In a statement issued by the Department of Economic Research, Bangko Sentral predicted inflation settled within the 2.8 percent to 3.6 percent range.
“Higher prices of domestic petroleum and rice along with the increase in electricity rates in Meralco-serviced areas and a more depreciated peso were seen to contribute to upward price pressures for the month,” it said.
“Nonetheless, the staff’s assessment indicates that average inflation for 2017 will remain within the government’s inflation target of 2 to 4 percent,” it said.
Inflation in the first eight months averaged 3.1 percent, slightly higher than the midpoint of the target range of 2 percent to 4 percent for the year.
A manageable inflation environment and robust domestic economic growth prompted the Monetary Board of Bangko Sentral to maintain the current policy settings steady in its meeting on Sept. 21, 2017.
The interest rates of 3.5 percent for overnight lending, 3 percent for overnight borrowing, and 2.5 percent for deposit facilities were maintained. The reserve requirement ratios were also maintained.
Bangko Sentral Governor Nestor Espenilla Jr. said the board’s decision was based on its assessment that the inflation environment remained manageable.
“Latest forecasts show that the future inflation path will continue to be within the target range for 2017-2019. Meanwhile, inflation expectations remain firmly anchored close to the midpoint of the government’s 2 to 4 percent over the policy horizon,” Espenilla said.
Espenilla also said while the proposed tax reform program might exert potential transitory pressures on prices, various social safety nets and the resulting improvement in output and productivity were also expected to temper the impact on inflation over the medium term.
The board maintained the inflation average forecast this year and next at 3.2 percent. But the forecast for 2019 was adjusted upward to 3.2 percent from the earlier estimate of 3.1 percent.
Deputy Governor Diwa Guinigundo said the adjustment in inflation forecast for 2019 considered four factors. These are the weakening peso, uptick in oil prices in the global markets, high liquidity condition and the recent adjustment in daily wages in Metro Manila.
“The impact on inflation of the wage adjustments could be felt in the latter part of the year,” Guinigundo said.
Earlier, ING Bank Manila senior economist Joey Cuyegkeng said there was no compelling reason for Bangko Sentral to change its policy stance as inflation remained within the target range and favorable economic growth prospects persisted.
