The Bangko Sentral ng Pilipinas (BSP) expects headline inflation in October to fall within the range of 1.9 percent to 2.7 percent, considering the impact of higher oil and food prices, as well as the drop in rice prices and Meralco rates nationwide.
The forecast compares with the 2.4 percent headline inflation in September, the highest since March last year, and with 1.8 percent in August.
The October forecast is still well within the 2 percent to 4 percent government target range for 2016 to 2018, announced earlier by the Development Budget and Coordination Committee (DBCC). The Philippine Statistics Authority is set to release the October headline inflation data on November 4.
BSP Governor Amando Tetangco Jr. said the central bank observed higher oil and food prices in October, with consumer food products more expensive in areas damaged by typhoons Karen and Lawin.
He added, however, the rise in food products was tamed by lower prices of rice and Meralco power rates.
“The BSP forecast suggests that October inflation could settle within the 1.9 to 2.7 percent range,” Tetangco said in a text message to reporters on Wednesday.
“The effects of higher domestic oil prices during the month, as well as a transitory uptick in food prices in areas affected by typhoons Karen and Lawin, could be partly offset by the slight decline in nationwide rice prices and power rates in Meralco-serviced areas,” he added.
Meralco earlier announced a rate cut this month by P0.1216 per kilowatt-hour (kWh) to P8.34 per kWh for a typical household.
The BSP governor said the central bank will continue to observe any economic and financial trend that could trigger a surge in prices.
“Moving forward, the BSP will remain watchful of economic and financial developments that could affect inflation, in line with its commitment to the inflation target and in support of the government’s growth objectives,” he said.
The central bank expects headline inflation to hit an average of 1.7 percent by end-2016, while forecasting rates to reach 2.9 percent and 2.6 percent by 2017 and 2018, respectively.