AVERAGE consumer price increases will likely remain near the slowest pace on record in September as muted food and fuel costs kept the overall basket of goods light on households’ pockets.
Banks said low inflation in September, coupled with strong economic prospects, would keep the Bangko Sentral ng Pilipinas (BSP) from making interest rate adjustments in the foreseeable future.
“We think inflation is near if not already at the bottom as the drag from oil prices starts to diminish due to base effects,” Bank of the Philippine Islands (BPI) economist Emilio Neri Jr. said at the weekend.
The Inquirer polled seven banks, which gave a median forecast for September inflation of 0.6 percent, matching August’s record low. This was also near the midpoint of the central bank’s own forecast for the month of an inflation rate between 0.2 and 1 percent.
Last year, inflation peaked at 4.9 percent in July and August, which meant base effects keeping inflation down were more pronounced during those same months in 2015.
The BSP’s main goal is to protect consumers’ purchasing power by keeping prices stable. This is done by influencing consumer demand through interest rate adjustments and the management of the country’s money supply.
For all of 2015, the BSP expects inflation to average below the target range of 2 to 4 percent due to the slower-than-expected recovery in fuel prices.
“We expect inflation to creep higher toward yearend, with a December inflation forecast of around 1 to 1.2 percent,” said Joey Cuyegkeng, ING’s economist in Manila. BPI’s Neri said inflation may rise back above 2 percent early in 2016.
In a statement last week, central bank Governor Amando M. Tetangco Jr. said the impact of a stronger and protracted El Niño on food prices and utility rates could provide a source of upside inflation in the months ahead.
“The BSP will continue to monitor evolving price trends to ensure price stability conducive to a balanced and sustainable economic growth,” he said.