BSP: Inflation to keep decline in September
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Mon, 30 Sep 2019 16:23:05 +0000
INFLATION likely dropped further last month on the back of sustained deceleration in rice prices and lower electricity rates, the Bangko Sentral ng Pilipinas (BSP) announced on Monday.
In a statement, the central bank said its Department of Economic Research projected consumer price growth “to settle within the 0.6 – 1.4 percent range” in September.
The forecast is lower than August’s 1.7 percent and the 6.7 percent posted in September 2018.
The Philippine Statistics Authority is set to release official September inflation data on October 4.
The BSP said “the continued decline in rice prices and the downward adjustment in electricity rates 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.”
Latest PSA data show that rice prices decreased in the first week of September, with the average retail price of regular milled rice dipping by 0.4 percent from P37.99 per kilogram the week before.
The Manila Electric Co.’s per kilowatt-hour (kWh) rate for households consuming 200 kWh monthly was trimmed by P0.5260 last month.
Energy companies implemented a hike of P2.35 per liter for gasoline, P1.80 per liter for diesel and P1.75 per liter for kerosene.
“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 Bangko Sentral said.
On September 26, monetary authorities cut their 2019 inflation forecast to 2.5 percent from 2.6 percent, while 2020 and 2021 projections were both kept at 2.9 percent.
“In the near term, inflation will continue to decelerate and reach the lower-end of the target range until November 2019, due primarily to base effects as oil and rice prices peaked at the same period in 2018,” BSP Assistant Governor Edna Villa has said.
For 2020 and 2021, Villa explained that the baseline forecasts reflect the expected recovery in domestic economic growth and positive base effects as the impact of rice tariffication tapers off.
For his part, BSP Governor Benjamin Diokno said the volatility in oil prices on account of geopolitical tensions in the Middle East and from the potential impact of the African swine fever outbreak on food prices were the upside risks to inflation over the near term.
The subdued pace of global economic activity, on the other hand, continues to temper the inflation outlook, he added.