BSP sees even lower inflation for October
MANILA, Cheaper petroleum and rice two of the top drivers of inflation is likely to restrain the consumer price index for October to an even slower pace versus the already low level reported in the previous month, planners of the central bank said Thursday.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said its Department of Economic Research expects the inflation rate for last month to settle within the 0.5-1.3 percent range.
This is slightly lower than the 0.6-1.4 percent range that the central bank’s economists forecast for September where the official number was revealed to be 0.9 percent a few days later.
“Inflation could be tempered by lower domestic oil and rice prices,” the BSP’s economists said, adding that “the increases in electricity and water rates, as well as higher prices of LPG and selected food items, are seen as the primary sources of upward price pressures for the month.”
The government will release official inflation figures on November 5, Tuesday.
Last month, the central bank warned that, going forward, the brewing global trade war could bring more price risks to the Philippine economy, especially with the US continuing its tense trade relations with China, while the World Trade Organization allowed the US to impose tariffs on several European Union goods.
The September inflation is the lowest recorded in three years, but the regulator said that prices would pick up slightly in the fourth quarter.
“Looking ahead, the BSP will remain watchful of evolving inflationary conditions to ensure that the monetary policy stance remains consistent with the central bank’s price stability mandate,” the regulator said.
If confirmed, the slower inflation rate in October would validate the central bank’s decision to reduce the reserve requirement of local financial institutions anew by 100 basis points last week.
The surprise move brought the total cuts made by BSP to the amount of cash banks must keep immobilized in their vaults by 4 percentage points since Governor Benjamin Diokno took its reins earlier this year, each percentage point releasing up to P100 billion in cash into the financial system.
Diokno earlier said he wants to reduce the reserve requirement of banks still one of the highest in the world today – to single-digit levels by the end of his term in 2023.
On top of these string of reserve requirement cuts, the central bank has also cut its key interest rate by a total of 75 basis points this year.