Inflation at 6.7% in October

Inflation in October stood at 6.7 percent year-on-year, the same rate of increase in prices of basic commodities as last September, although food price pressures eased as a result of the government’s move to allow more imports and boost supply.

In a press conference Tuesday, National Statistician Lisa Grace S. Bersales noted that the month-on-month increase in inflation further slowed to 0.3 percent last October from 0.8 percent in September and the peak of 0.9 percent last August.

This meant that while consumer prices still rose last month, the increases were not as fast or as high as last September’s.

President Duterte issued orders in September aimed at easing imports of food products to address supply shortages.
As such, the year-on-year increase in prices of food and non-alcoholic beverages slowed to 9.4 percent in October from September’s 9.7 percent, Philippine Statistics Authority data showed.

For its part, the central bank said it would assess whether another rate hike was needed to cap rising consumer prices.

Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said the October inflation supported the view that inflation pressures were moderating.

“The Monetary Board will take into account these and other incoming data, including gross domestic product [growth] at its next policy meeting when it determines if there’s still need for further policy rate adjustments,” he said, striking a more dovish note that in previous statements.

So far, the BSP has raised interest rates by a total of 150 basis points this year having started gradually in May.

Senators see hope as they said there were indications that prices were going down and steps were being taken to prevent these from rising.

Senate President Pro-Tempore Ralph Recto said rice and oil prices were already on the decline and even the peso-dollar exchange rate has appreciated.

Recto also said Congress would approve the rice tarrification bill before the year ends, and this was expected to bring down the price of the country’s staple food.

PSA data showed that prices of alcoholic beverages and tobacco jumped 21.6 percent year-on-year last October, still on the back of higher excise taxes slapped on so-called “sin” products under the TRAIN law.

Inflation in Metro Manila slowed to 6.1 percent year-on-year in October from 6.3 percent last September.

The market, however, viewed the flat month-on-month inflation rate as an indication that another modest rate hike might come when the BSP’s policy-making body convenes next week to decide on the direction of interest rates.

“Given that inflation has not been able to show a substantial deceleration trend, the likelihood of that ‘moderate’ rate hike at the Nov. 15 meeting has increased,” ING Bank senior economist Nicholas Mapa said. The ING Bank economist predicted that the central bank would raise interest rates by another 25 basis points.