Inflation rate in October likely settled at a low of 0.5 percent from 0.9 percent in September because of softer oil and rice prices, according to the initial forecasts by the Bangko Sentral ng Pilipinas.
The BSP Department of Economic Research said in a statement the October inflation rate would likely settle within a range of 0.5 percent to 1.3 percent. The Philippine Statistics Authority will release the official figures next week.
“The increases in electricity and water rates, as well as higher prices of LPG and selected food items, are seen as the primary sources of upward price pressures for the month,” it said.
“Meanwhile, inflation could be tempered by lower domestic oil and rice prices,” the BSP said.
It said it would remain watchful of evolving inflationary conditions to ensure that the monetary policy stance remained consistent with its price stability mandate.
The Finance Department said earlier it was expecting a stronger economic growth in the fourth quarter on the back of continued easing of inflation rate and the ramping up of fiscal spending of the government, particularly on infrastructure projects under the “Build, Build, Build” program.
Finance Undersecretary Gil Beltran said in an economic bulletin the continuing drop in inflation gave monetary authorities policy room to loosen liquidity, enabling a cut in the policy rate by another 25 basis points to 4 percent on Sept. 26.
Inflation in September decelerated to a 40-month low of 0.9 percent from 1.7 percent in August, pulled down by the decline in the index of heavily-weighted food and non-alcoholic beverages.
This was the first time that inflation settled below 1 percent since May 2016. The September 2019 inflation was also significantly slower than the peak of 6.7 percent in September 2018.
This brought inflation in the first nine months to an average of 2.8 percent, below the mid-point of the 2019 target range of 2 percent to 4 percent.
The softening of consumer prices prompted the board to cut the inflation forecast this year to 2.5 percent from the previous estimate of 2.6 percent made in the Aug. 8 meeting. The forecasts for 2020 and 2021 were kept steady at 2.9 percent.
