Higher fuel prices push inflation up in October — BSP

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Photo courtesy of Bangko Sentral ng Philippines Facebook page

MANILA, Philippines — The central bank expects the average prices of basic goods and services in the local economy to rise 4.5 to 5.3 percent in October, mainly due to the steady rise in prices of gasoline. oil on the local and international market.

In a statement, the governor of Bangko Sentral ng Pilipinas (BS), Benjamin Diokno, also said that “the increase in Meralco’s electricity tariffs, the increase in fish and fruit prices and the depreciation of the peso will exert additional upward pressure “.

At the same time, however, these could be partially offset by the continued decline in rice and meat prices, reflecting the continued arrival of pork imports since the government lowered tariffs to alleviate the shortage, mainly due to the prolonged effects of African swine fever which started in 2019.

The central bank’s October forecast range is biased upward from the September inflation rate of 4.8%, as many market watchers expected the market price index to rise. consumption for this month exceeds 5%.

“Going forward, the BSP will continue to closely monitor emerging price developments to ensure that its core mandate of price stability conducive to balanced and sustainable economic growth is met,” Diokno said.

The Philippines Statistics Authority (PSA) was due to release the official inflation rate for October on November 5, Friday.

Last week, the central bank reiterated that domestic inflation remains “manageable” and maintains the conditions to keep domestic interest rates at historically low levels as part of the regulator’s efforts to revive growth that has been ravaged. by the COVID pandemic.

The central bank also said risks to the inflation outlook have shifted up for the remainder of 2021 but remained “broadly balanced” for 2022 and 2023.

“The upside risks could stem from pressures on international commodity prices amid improving global demand and persistent supply chain bottlenecks, as well as the potential effects of weather and weather disruptions. of a possible prolonged recovery from the ASF epidemic, “he said. “In the meantime, the continued risk of COVID-19 infections continues to pose downside risks to the outlook, as possible delays in lifting containment measures could further dampen global growth and domestic demand,” the central bank added.

At its last monetary policy meeting, the BSP decided to keep its overnight key rate at 2%, highlighting the latest forecast showing that average inflation is expected to stabilize slightly above the upper end of the government target range of 2-4%. target range in 2021 before returning to the midpoint of the target range in 2022 and 2023.

BST

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