The Bangko Sentral ng Pilipinas said inflation in November likely eased further to as low as 4 percent from 4.9 percent a month ago on the back of lower prices of food and fuel products as well as the stronger peso.
In a statement, BSP projected the November 2023 inflation to settle within the range of 4.0 to 4.8 percent.
“Higher prices of most agricultural commodities like rice, fruit, fish, and meat items and adjustments in electricity, LPG, and toll rates are the primary sources of upward price pressures in November,” BSP said.
“Meanwhile, lower prices of vegetables and petroleum products along with the peso appreciation could contribute to downward price pressures,” it said.
Inflation in October slowed to a three-month low of 4.9 percent from 6.1 percent a month ago, pulled down by slower increases in the prices of food and nonalcoholic beverages.
The BSP continues to monitor developments affecting the outlook for inflation and growth in line with its data dependent approach to monetary policy formulation.
Earlier, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the BSP might consider pausing again during its last policy meeting for the year, especially if inflation decelerates further and the peso remains stable.
Ricafort said the BSP could also match the next Federal Reserve rate decision on Dec. 13, 2023 to maintain healthy interest rate differentials to help support/stabilize the peso exchange rate, import prices, and overall inflation.
The next policy meeting by the Monetary Board is on Dec. 14.
“[A] pause on local policy rates [is] also a possibility, especially if the peso exchange rate is relatively stable, global crude oil prices continue the easing trend, and headline inflation eases further towards the BSP’s inflation target of 2 percent to 4 percent,” Ricafort said.
On Nov. 16, the BSP kept the overnight borrowing rate steady at 6.5 percent amid the slowdown in inflation in October and the stronger gross domestic product expansion in the third quarter.
Meanwhile, the third-quarter GDP growth of 5.9 percent from 4.3 percent a quarter ago supported the view that the country’s medium-term growth prospects remained largely intact, even as pent-up demand continued to diminish in the near term.
The board raised the policy rate by 25 basis points to 6.5 percent in an off-cycle move last Oct. 26 to rein in inflation.
Ricafort said since the start of the year, the peso already slightly appreciated on a year-to-date basis by 0.7 percent and is currently among the best performers in Asia. It closed at 55.38 last Friday.
Earlier, British financial firm Hongkong and Shanghai Banking Corp. said the BSP might maintain its monetary policy stance until the third quarter of next year.