A deputy governor of the central bank said he expected inflation, now at a 17-year high, to peak in October without exceeding 13 percent.

Deputy Governor Diwa Guinigundo of the Bangko Sentral ng Pilipinas (BSP) told reporters that the continuing rise of food and fuel prices will accelerate inflation as measured by the increase in the consumer price index from the 12.2 percent registered in July.

“The hump has become higher,” Guinigundo said. “But I think it will still be below 13 percent when it peaks in October.”

As inflation broke into double-digit levels, aggravated by second-round effects of wage and transport fare increases, the BSP has shifted into a monetary tightening mode since June. Over the past two months, it has increased its key interest rates by a total of 0.75 percentage point and signaled it will not hesitate to take further action if needed to rein in inflation.

Guinigundo said the BSP would have to remain cautious because the environment was still fraught with risks, given volatile crude oil prices.

Another concern is that the US dollar has started to rebound from a seven-year slump, pulling down the peso and other Asian currencies despite softening oil prices, he added.

According to BSP baseline forecasts, inflation will remain in the 12-percent levels through to November and return to single-digit levels staring in April.

The central bank expects inflation to average 9.0-11.0 percent this year and 6.0-8.0 percent next year, compared with its maximum target of 5.0 percent and 4.5 percent, respectively.

From January to July this year, inflation averaged at 8.3 percent. Doris C. Dumlao; edited by INQUIRER.net