Inflation rose to 2.3 percent in October, similar to the rate in the previous month but a jump from the record-low figure a year ago, mainly on higher food prices due to typhoons that hit the country that month, the government reported Friday.
As a result, the rate of increase in prices of basic goods in the first 10 months averaged 1.6 percent, still below the government’s 2- to 4-percent target.
Economic managers expect inflation for 2016 to settle below the target range although upside risks remained, Socioeconomic Planning Secretary Ernesto M. Pernia said.
“Risks include the possible rally in oil prices, depreciation of the peso against the US dollar, pending petitions for electricity rate increase, and tropical cyclones,” said Pernia, who is also the director general of state planning agency National Economic and Development Authority.
In a text message to reporters, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. noted that the Philippine Statistics Authority (PSA) attributed the year-on-year pick up in October inflation to “mixed movements among commodity groups, with food, non-alcoholic beverages and clothing showing higher annual mark-ups.”
The headline inflation in October was the highest since March 2015’s 2.4 percent as well as higher than a year ago’s record-low of 0.4 percent caused by the then downward spiral in global oil prices.
Pernia, meanwhile, described October inflation as “steady” on the back of “slower increases in prices of health commodities and alcoholic beverages and tobacco.”
Tetangco said the October figure was “in line with our view that inflation will be manageable over the policy horizon and slowly rise to within target in 2017-18.” The Monetary Board, the BSP’s highest policymaking body, will meet on Nov. 10 to discuss monetary policy, although economists said there would unlikely be any adjustment in key policy rates at that meeting.
“We will continue to monitor pending petitions for hikes in utility rates, among others, on the domestic front, and global economic activity on the external front as well as risk factors to the outlook,” Tetangco said.
Pernia said that while domestic demand was anticipated to remain robust, supply conditions, particularly of food, were expected to improve.
“This should help keep commodity prices steady. Rice prices will be kept stable by the timely arrival of rice imports under the government-to-government procurement scheme,” Pernia added.
PSA data showed that food inflation picked up to 3.5 percent in October from 3.1 percent last September, partly as vegetable prices increased at the start of the fourth quarter on the back of limited supply due to the onslaught of typhoons Karen and Lawin in northern Luzon.