THE Bangko Sentral ng Pilipinas (BSP) on Monday said inflation further decelerated in September from its level in the previous month, owing largely to lower rice prices and base effects.
In a statement, the BSP Department of Economic Research announced its projection for the September inflation at 0.6 to 1.4 percent. This means that BSP’s models point to an assured deceleration from the 1.7-percent inflation rate in August.
The BSP’s forecast signals the fourth consecutive month that inflation will decelerate and will yield an average nine-month inflation print of 2.8 to 2.9 percent for this year.
The BSP said the lower inflation is brought about by the continued decline in rice prices and the downward adjustment in electricity rates. However, this could be offset by the recent uptick in fuel prices, as well as higher prices of selected food items due to weather disturbances during the month.
“Moving forward, the BSP will remain watchful of economic and financial developments that could affect the inflation environment in line with its commitment to price stability conducive to long-term economic growth,” the BSP said.
Security Bank economist Robert Dan Roces—whose forecast is for inflation to hit 1 percent for the month—said base effects are also at play.
“Due to favorable base effects and anticipated consumption factors in the coming months, we expect inflation levels to be below 2 percent until November 2019. With this, we have also adjusted our 2019 average inflation estimate to be at 2.5 percent, and remains consistent with the prevailing assessment of a benign inflation outlook over the policy horizon for the rest of the year,” Roces said.
Last year, inflation hit its peak of 6.7 percent in September and October.
“Our estimate takes into account the latest pump price increase caused by tensions in the Middle East that caused global oil prices to rise. However, we do not see a repeat of the inflationary push similar to last year as production levels are slowly normalizing in Saudi Arabia.
We also accounted for the fallout from the African swine fever [ASF]that pushed prices for pork substitute goods to go up very slightly,” Roces added.
In their latest monetary-policy meeting, the BSP said the forecast an average of 2.5 percent for inflation for 2019 as price growth will continue to decelerate and breach the low end of the target range “primarily due to base effects.”
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