The Bangko Sentral ng Pilipinas said Wednesday inflation rate in October may hit as high as 7 percent on the back of higher costs of fuel and water.
The Bangko Sentral’s Department of Economic Research said in a statement the October 2018 inflation would likely settle within a range of 6.2 percent to 7 percent. The higher end represents an acceleration from the 6.7-percent increase in consumer prices in September, the fastest in nine years.
It said month-on-month inflation rate would likely fall within a range of -0.2 percent to 0.6 percent, in line with the central bank’s assessment that inflation would have peaked in third quarter of 2018 in the absence of further price shocks. October marks the start of the fourth quarter.
“Upward price pressures from domestic petroleum prices and water rates in Manila Water and Maynilad-serviced areas could be offset by the lower prices of rice and other food items as well as the downward adjustment in Meralco power rates,” the BSP said.
The Monetary Board, the policy-making body of Bangko Sentral, already raised the overnight borrowing rate by a total of 150 basis points since May 2018 in a bid to temper the rising prices.
ING Bank Manila said Tuesday it expected the central bank to increase the benchmark interest rate again before the end of the year.
“Moving forward, the BSP will continue to closely monitor evolving trends in prices and inflation expectations, and will undertake necessary measures towards its commitment to price stability,” the Bangko Sentral said.
The Philippines Statistics Authority earlier reported that inflation rate climbed to 6.7 percent in September from 6.4 percent in August. It was the steepest climb since February 2009.
This brought inflation in the first nine months to 5 percent, above the government’s target range of 2 percent to 4 percent for 2018.
Results of the latest survey conducted by the Bangko Sentral ng Pilipinas for September 2018 showed that the mean inflation forecast by private sector economists in 2018 rose to 5.3 percent from 4.5 percent in the June 2018 survey.
Mean inflation forecasts for 2019 and 2020 also increased to 4.3 percent and 3.9 percent, both from 3.8 percent in the previous survey, respectively.
Private sector economists linked the higher inflation rate this year until 2020 to the peso depreciation against the US dollar, higher fuel prices and the impact of the Tax Reform for Acceleration and Inclusion law on domestic goods and services.