The central bank estimates that headline inflation in September will settle within its projected range for the month of 0.2 percent to 1 percent, easing further from what is already the lowest on record at 0.6 percent, posted in August.
“September inflation could remain low and settle within the 0.2 percent to 1.0 percent range as downward adjustments in power rates and the modest decline in rice prices could offset the effect of a weaker peso during the month,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said in a text message to reporters on Tuesday.
The Philippine Statistics Authority (PSA) is releasing inflation figures for September on October 6.
BSP’s inflation estimate for September stands below its full-year 2015 forecast of 1.6 percent, which is a revised figure from its previous forecast of 1.8 percent. The central bank announced the downward revision late last week when it kept its key interest rates steady at a monetary policy meeting.
Keeping its key policy rates unchanged was a Monetary Board decision based on its assessment of the dynamics and risk in the inflation environment over the policy horizon, the BSP said.
The BSP’s latest policy action followed the move by the US Federal Reserve the preceding week to hold its key Fed rate steady at the zero level, which Fed chair Janet Yellen said was based on the current inflation outlook and partly influenced by the ongoing crisis in China.
Main power distributor Manila Electric Co. had announced that for the month of September its residential power rates would be lower by P0.57 per kilowatt-hour (kWh).
That brings the total reduction over the past five months to P2.13 per kWh.
In August this year, headline inflation cooled to an all-time low of 0.6 percent from 0.8 percent in July and from 4.9 percent in August last year.
“However, the impact of a stronger and protracted El Niño on food prices and utility rates could provide a source of upside inflation in the months ahead,” Tetangco warned.
Early third-quarter economic data has shown signs that growth in the second half of the year may be accelerating from the first half. According to a joint report released late last week by think tanks First Metro Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P), economic data from the third quarter appeared more supportive of faster growth in the second half, given the low-inflation environment, increased government spending an expected recovery in merchandise exports.
“The BSP will continue to monitor evolving price trends to ensure price stability, conducive to a balanced and sustainable economic growth,” Tetangco said.