The annual inflation rate accelerated to 5.2 percent in October from 4.8 percent in September on the back of price increases in heavily weighted food items, the National Statistics Office said yesterday.
Economists attributed the higher food prices to farm damage and transport disruptions due to recent typhoons but expected the inflation rate to stay within the Bangko Sentral ng Pilipinas’ (BSP) target range. Hence, economists said, they would not expect any changes in monetary policy.
“Third-quarter performance will be slightly better than [the second quarter] but the rise in inflation can be attributed to cost-push factors such as supply constraints and rise in production input cost—not demand-pull factors associated with the economic growth and recovery. I think the BSP will maintain policy rates because the average inflation is still within the 3 to 5 percent range,” according to Cid L. Terosa, economist at the University of Asia and the Pacific.
Former budget secretary Benjamin E. Diokno, now with the UP School of Economics, also said he saw no concern over inflation or a need to change monetary policy.
“I expect inflation to taper off as a result of slower economic growth, falling oil prices and appreciating peso. January to October prices averaged 4.8 percent, well within the BSP target range. As a result, I expect no change in monetary policy,” Diokno said.
The increase in the October consumer price index under the new 2006 base year series compares with analysts’ forecasts of 5 percent in a Reuters poll. The new data series was first released in July.
The index under the old data series with 2000 as the base year rose an annual 5.3 percent, accelerating from the previous month’s rise of 4.6 percent, the NSO said.
The BSP had forecast annual inflation in October at between 4.5 percent and 5.4 percent, using the old series based on 2000 prices.
The central bank, which uses an inflation-targeting model to set policy, wants to keep average inflation for this year and next year at 3 to 5 percent. It uses the old 2000 data series to measure the target for 2011, and will switch to the new series next year.
The central bank said on Thursday it saw no need to adjust monetary policy even as the economic outlook for Europe and the United States worsens, though it was prepared to respond if necessary to stimulate the economy.
Last month, the central bank kept interest rates steady for the fourth meeting in a row and cut its inflation forecasts for 2012 and 2013 to 3.05 percent and 3 percent from 3.4 percent and 3.23 percent, respectively, both at the bottom of a 3- to 5-percent target range.
Analysts widely expect the Bangko Sentral to keep interest rates steady at 4.5 percent until early 2012 to support growth.
The government has cut its 2011 growth forecast to 4.5 to 5.5 percent from 5 to 6 percent and its 2012 growth forecast to 5 to 6 percent from 5.5-6.5 percent. With a report from Reuters