BSP forecasts September inflation as high as 7.1% » Manila Bulletin Business

Manila Bulletin Philippines

Breaking News from the Nation's leading newspaper


Online Newspaper

Showbiz and Celebrity News

Sports News

World News
News Asia

BSP forecasts September inflation as high as 7.1%


By Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) said inflation rate for September could hit a peak of 7.1 percent but could settle at 6.8 percent due to increased prices of gasoline, rice and other vegetables, and further aggravated by the peso depreciation.

A logo of the Bangko Sentral ng Pilipinas is seen at their headquarters in Manila, (REUTERS/Romeo Ranoco / MANILA BULLETIN)

A logo of the Bangko Sentral ng Pilipinas is seen at their headquarters in Manila, (REUTERS/Romeo Ranoco / MANILA BULLETIN)

In a statement late Friday, the BSP’s Department of Economic Research said they forecast a range of 6.3 percent to 7.1 percent inflation for this month. Inflation in August was 6.4 percent, a nine-year high.

The BSP said, however, that inflation could “settle at around 6.8 percent” for the month of September.

“(The) higher domestic petroleum prices, higher prices of rice and other agricultural commodities due to typhoon ‘Ompong,’ and the peso depreciation contributed to the upside price pressures for the month,” said the central bank. “However, these could be partly offset by the downward adjustment in Meralco power rates.”

The BSP said it “will continue to remain on guard to evolving inflationary conditions to ensure that the monetary policy stance remains consistent with our price stability mandate.”

Ompong, which hit the country in mid-September, disrupted inflation-sensitive food supply and other weather-related disturbances. The estimated cost of damage to the agricultural sector alone was about P14 billion, according to reports. Fatalities numbered between 90 and 100.

The government will release the inflation report on Friday, October 5.

The BSP on Thursday hiked overnight borrowing rate by another 50 basis points to 4.50 percent, while lending rate was increased to five percent and the deposit rate at four percent. This is the fourth time that the BSP raised the key rate to address high inflation and exchange rate volatility.

BSP Deputy Governor Chuchi G. Fonacier, currently the governor-in-charge, said price pressures have called for a “further tightening of monetary policy (amid) persistent signs of sustained and broadening price pressures … with supply-side forces expected to continue to drive inflation in the coming months (while) inflation expectations have remained elevated amid indications of second-round effects.”

The BSP likewise raised its 2018 inflation forecast to 5.2 percent from an earlier estimate of 4.9 percent. Next year’s inflation outlook has now breached the two-four percent target, at 4.3 percent from a previous forecast of 3.7 percent.

The BSP did not change its 2020 forecast which remains at 3.2 percent.

Fonacier said the Monetary Board is hoping that a “tighter monetary policy stance will help steer inflation toward a target-consistent path over the medium term by reducing further risks to the inflation outlook, including those emanating from exchange rate volatility given the continued uncertainty in the external environment amid geopolitical tensions and the normalization of monetary policy in advanced economies.”

The peso on Friday closed at P54.02:$1, gaining some ground from its previous close of P54.23, as the market reacted positively to the latest BSP rate hike. As of September 28, the peso-US dollar rate averaged at P53.94.

Related Posts