Higher energy, food prices may have pushed Sept. inflation above 5%, says BSP

The central bank expects prices of basic goods and services in the country to have risen at a faster clip in September due to costlier energy and food items, both of which weigh heavily on the closely-tracked inflation basket.

In a statement, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the agency’s economists expect the September 2021 consumer price index to settle within the 4.8‑5.6 percent range. This range puts the likelihood of faster inflation above the latest official rate which came in at 4.9 percent for August—itself at the top end of the central bank’s 4.1-to 4.9-percent forecast for that period.

“Inflation will be driven by the upward adjustments in domestic oil prices, Meralco electricity rates, retail prices of basic necessities and prime commodities, and prices of selected fruits and vegetables as well as rice,” Diokno said.

He added, however, that these could be partially offset by the decline in meat prices along with the slight appreciation of the peso.

The Philippine Statistics Authority is set to release the inflation rate report for September on Oct. 5, Tuesday.

Most market watchers expect the average pace of price increases in the Philippines to have risen further due to the stubbornly high prices of food products—aggravated by recent weather disturbances—and rising energy costs.

Earlier, ING Bank Manila senior economist Nicholas Mapa predicted that the inflation rate for September would breach 5 percent, after catching market watchers off guard with a 4.9-percent spike in August.

Despite these developments, the central bank brushed off the unexpected spike in the inflation rate for August, saying the pace of price increases for basic goods and services would normalize soon.

Diokno believes that the latest outturns are consistent with the assessment that “inflation could settle close to the high end of the target range in the near term before decelerating back to within the target range by year-end.”

In particular, he believes that inflation in 2022 and 2023 will likely fall toward the midpoint of the target, supported by the continued and timely implementation of nonmonetary measures and reforms to address directly supply-side pressures on key food items.

“Moving forward, the BSP will continue to monitor emerging price developments to help ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” Diokno said.

—Daxim L. Lucas