Inflation hits 3-year high of 3.5% in October

Inflation in October picked up to its fastest pace in three years mainly on higher food and oil prices.

The headline inflation rate of 3.5 percent last month was the highest year-on-year increase in the prices of basic goods since the 3.7 percent posted in November 2014, government data released yesterday showed.

Inflation averaged 3.2 percent during the first 10 months.

In a statement, the state planning agency National Economic and Development Authority noted that food inflation rose to 3.8 percent in October from 3.7 percent in September due to faster increases in the prices of corn, meat and vegetables.

“Higher prices for corn and vegetables may be traced still to the lingering effects of Typhoon ‘Jolina,’ Tropical Depression ‘Maring” and Typhoon ‘Paolo.’ On the other hand, higher prices of meat can be attributed to the import ban on Brazilian meat products, affecting domestic meat production costs,” explained Socioeconomic Planning Secretary Ernesto M. Pernia, who also heads Neda.

Nonfood inflation rose 3.2 percent last month, slightly higher than September’s 3.1 percent because of the 26-percent jump in liquefied petroleum gas prices, 22.8-percent climb in diesel and 13.2-percent increase in kerosene.

“Crude oil prices may increase in the near term due to the continuing increase in global oil demand,” Pernia said.

Moving forward, Pernia said the upcoming holiday season might further raise consumer prices.

“Upbeat consumer spending this holiday season is also expected to push prices up. Within the near term, higher utility rates, increasing domestic fuel prices and the depreciation of the peso may further exert upward pressures on inflation,” according to Pernia.

“This warrants close monitoring of the rising prices in domestic petroleum as well as utility rates,” the Neda chief said.

Pernia nonetheless said that they expected full-year inflation to settle within the government’s target of 2-4 percent.

Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla Jr. said in a statement that they expected inflation to remain manageable over the policy horizon after taking into account the latest assessment of price levels in October.

“Inflation is projected to settle near the midpoint of the national government’s target range of 2-4 percent in 2017 to 2019. Firm domestic economic activity, ample liquidity and well-anchored inflation expectations continue to support within-target inflation,” Espenilla said.

“Looking ahead, the BSP will remain vigilant against any risks to the inflation outlook to ensure that the monetary policy stance remains consistent with the mandate of preserving price stability conducive to economic growth,” according to Espenilla. —BEN O. DE VERA