Rising fuel cost, typhoons could cause Nov. inflation uptick

The pace of price increases in the local economy likely accelerated this month due to higher energy costs as well as more expensive food items caused by the recent spate of typhoons, according to the central bank.

In a statement, the economists of the Bangko Sentral ng Pilipinas (BSP) said they expected the November 2020 inflation to settle within the 2.4 to 3.2 percent range, which indicated a possible upward shift from the official October consumer price index of 2.5 percent.

“Higher domestic oil prices, as well as the impact of weather disturbances on the prices of rice and select agricultural commodities contributed to upward price pressures during the month,” the BSP statement said.

But these higher prices could be partly offset by the downward adjustment of electricity rates in Meralco-serviced areas and the continued appreciation of the peso.

The Philippine Statistics Authority is scheduled to release the inflation rate for November on Dec. 4, Friday.

“Looking ahead, the BSP will remain watchful of economic and financial developments to ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” the central bank said.

Despite this emerging uptrend, BSP Gov. Benjamin Diokno believed the overall inflation rate would likely stay muted over the short term due to weak demand both locally and abroad.

“The balance of risks continues to lean toward the downside due largely to the impact on domestic and global economic activity of possible deeper economic disruptions caused by the pandemic,” he said.

The year-to-date average inflation rate of 2.5 percent remained within the government’s target range of 3 percent, plus or minus 1 percentage point for the year.

By contrast, core inflation—which excludes selected volatile food and energy items to measure underlying price pressures—eased to 3 percent year-on-year in October from 3.2 percent in September.

The slow upward trek of the inflation rate has also not deterred the regulator from pumping more liquidity into the financial system in a bid to jump-start the economy that has been ravaged by the pandemic.

Less than two weeks ago, the central bank implemented a surprise 25-basis point rate cut, lowering its key interest rate further to an all-time low of 2 percent. INQ