Inflation in November seen to fall within target range | Inquirer Business

Inflation in November seen to fall within target range

/ 11:43 PM November 25, 2011

The Bangko Sentral ng Pilipinas expects inflation in November to fall within the range of 4.5 to 5.4 percent, adding this is still within levels supportive of economic growth.

Central bank officials said that the hike in electricity charges and supply problems for some food items due to typhoons that came in the previous month drove up consumer prices for November.

In the event the BSP forecast holds true, the figure in November will put average inflation for the first 11 months of the year at 4.8 to 4.9 percent.

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This range is still within the government’s cap of between 3 and 5 percent for the year.

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The central bank said inflation below 5 percent is manageable and supportive of efforts to accelerate growth of the economy.

Benign inflation encourages households to spend more while enterprises tend to pursue more investment activities.

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BSP Governor Amando Tetangco Jr. yesterday told reporters that in 2012 and 2013, rate of rise in consumer prices would fall within the official target.

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This is because of the expected increase in domestic investments, which may boost supply of goods and services.

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Tetangco said the favorable inflation environment in 2011 to 2013 would give the BSP the flexibility to ease monetary policy should global economic problems worsen.

Cuts in key interest rates tend to encourage individuals and businesses to secure loans. Rise in borrowings may help boost consumption and investments which, in turn, fuel growth of the economy.

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Currently, the central bank’s key policy rates stand at 4.5 and 6.5 percent for overnight borrowing and lending, respectively.

Inflation pressures were felt earlier this year due to rising global oil prices and growing domestic demand. This prompted the BSP to raise the key rates.

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But in the second half of the year, the BSP held off any adjustments to its monetary policy. According to central bank officials, inflationary pressures have subsided due to the weakened economies of most industrialized countries.

TAGS: Bangko Sentral ng Pilipinas, Business, economic growth, Inflation

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