Economic Planning Secretary Arsenio Balisacan. INQUIRER FILE PHOTO
The increase in consumer prices accelerated in September but stayed well below the target for the year, cementing claims that the Philippines continued to be in a sweet spot of fast economic growth and benign inflation.
The National Statistics Office (NSO) reported Friday that the annual inflation rate settled at 2.7 percent in September, faster than the four-year low of 2.1 percent in August.
The latest figure, however, was still below the official target for 2013 of 3 to 5 percent. It was also slower than the 3.7 percent posted in September last year.
The average inflation rate for the first 10 months of the year stood at 2.8 percent.
Data from the NSO showed the following commodity groups registered faster annual inflation rates in September than in August: food and non-alcoholic beverages; alcoholic beverages and tobacco; housing, water, electricity, gas and other fuels, and health. Inflation for food alone accelerated from 1.8 to 2.5 percent.
Economic Planning Secretary Arsenio Balisacan, director general of the National Economic and Development Authority, had said that price pressures from the external front, including volatile prices of oil in the world market, had a very manageable impact on domestic inflation.
He said any uptick in prices was unlikely to cause a breaching of the inflation target given that the year-to-date figure remained below the low end of the target.
Balisacan added that any mild depreciation of the peso would not cause inflation to go beyond target.
However, central bank officials remained wary of the possible effects that external forces might have on the country’s strong domestic fundamentals.
Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. yesterday said that while low inflation in September affirmed the correctness of current monetary policy settings, adjustments might have to be made amid uncertain conditions abroad.
“[The September rate] reaffirms our assessment that inflation would remain manageable over the policy horizon and that barring any unforeseen developments, policy settings continue to be appropriate,” the official said.
The stable inflation as of September gives the central bank room to keep its policy rates accommodative to encourage domestic growth.
Bank of the Philippine Islands economist Emilio Neri, commenting on the news, said the inflation for September showed that consumer prices could start to accelerate in the coming months.
“The September inflation print, while surprising most analysts, validates our view that inflation has already hit a bottom last August and may be expected to accelerate closer to BSP’s inflation target for the year,” Neri said.
The BSP’s benchmark overnight borrowing and lending rates stand at record lows of 3.5 and 5.5 percent, respectively. The interest rate on Special Deposit Accounts (SDAs) also stands at a record low of 2 percent across all maturities.
The BSP earlier said there was little pressure for the BSP to touch its policy rates until the end of the year. BPI’s Neri said a slightly adjustment in rates could come in early 2014.