Philippines: Inflation has potential to jump 5.6% in September — BSP

MANILA, Philippines — Higher prices of oil, electricity and other basic consumer items likely pushed inflation beyond 5% in September, the Bangko Sentral ng Pilipinas said Thursday.

In a statement, the BSP said consumer price growth likely settled between 4.8-5.6% this month.

So far, inflation has been hovering above the upper-end of the government’s 2-4% annual target this year. The reading briefly returned within that target in July — when inflation stood at 4% — before accelerating to 4.9% in August.

In the first eight months, inflation averaged 4.4%.

“Inflation will be driven by the upward adjustments in domestic oil prices, Meralco electricity rates, suggested retail prices (SRP) of basic necessities and prime commodities, and prices of selected fruits and vegetables as well as rice,” the central bank said.

To recall, Manila Electric Co. (Meralco) announced that the overall rate for a typical household inched up by P0.1055 per kWh in September. At the same time, energy department data shows oil companies made four price adjustments in September, all of which were increases.

The country was also hit by typhoons in September, damaging crops and farmlands.

But the BSP said the price spikes “could be partially offset by the decline in meat prices along with the slight appreciation of the peso.”

The Department of Agriculture said it observed a drop in the retail prices of fresh pork. Based on the agency’s price monitoring, the prevailing price of kasim is now at P280 per kilo, down from its peak price of P360 per kilo in January. Liempo sells at P340 per kilo, P60 cheaper than its peak price of P400 per kilo in January.

Meanwhile, data shows the peso has weakened by nearly 2% month-on-month in September.

Last week, BSP Deputy Governor Francisco Dakila Jr. said inflation “is now tilted towards the upside” for the rest of the year due to supply problems that do not require any action from the central bank. At its meeting this month, the Monetary Board kept its benchmark rate at record-low 2%.

But Dakila said inflation may return within the target band in November this year. The BSP forecast inflation to average 4.4% this year, up from its previous projection of 4.1%.

“Moving forward, the BSP will continue to monitor emerging price developments to help ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” the BSP said.