By Keisha B. Ta-asan, Reporter
HEADLINE INFLATION may have eased to 5.1-5.9% in October as prices of fuel and key food items dropped, the Bangko Sentral ng Pilipinas (BSP) said late Tuesday.
If realized, October inflation would be slower than 6.1% in September and 7.7% a year earlier. However, October would be the 19th straight month that inflation has exceeded the central bank’s 2-4% target.
The lower end of the BSP’s inflation forecast would be the slowest in three months or since 4.7% in July.
The local statistics agency will release October consumer price index (CPI) data on Nov. 7.
“Higher prices of electricity, LPG (liquefied petroleum gas), fruits and fish, as well as the recent adjustment in jeepney fares are the primary sources of upward price pressures in October,” the BSP said.
Manila Electric Co. said the rate for a typical household went up by P0.4201 per kilowatt-hour (kWh) to P11.8198 in October.
LPG prices increased by P3.75 a kilogram in October, its third straight month of increase. AutoLPG prices likewise went up by P2.09 a liter.
Traditional and modern jeepneys also increased fares by P1 to P13 and P15, respectively.
“Meanwhile, lower prices of rice, meat and vegetables along with the reduction in the prices of petroleum products could contribute to downward price pressures,” the BSP said.
Data from the Department of Agriculture (DA) showed that as of Oct. 31, prices of beef rump ranged from P390 to P480 a kilo, narrower than P390 to P550 on Sept. 29.
Prices of cabbage, white potato and chayote also went down.
In October, the prices of gasoline, diesel and kerosene had a net decrease per liter of P3.1, P0.45 and P4.40 respectively, data from the Energy department showed.
“My October inflation view is 5.7% and this is driven by slowing rice prices which has been the largest driver in the past two months,” Patrick M. Ella, an economist at Sun Life Investment Management and Trust Corp., said in an e-mail.
Based on DA data, the retail price of local regular milled rice ranged from P41 to P44 a kilo as of Oct. 31, while well-milled rice ranged from P45 to P53.
Prices of rice have steadied even after President Ferdinand R. Marcos, Jr. lifted the rice price ceiling on Oct. 4. In September, Mr. Marcos ordered prices to be capped at P41 a kilo for regular milled rice and P45 for well-milled rice.
Rice accounts for nearly 9% of the CPI basket.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said better weather conditions in October helped stabilize food prices, compared with the heavy rains that caused agriculture damage from late July to September.
“The palay harvest season from mid-September to October also increased local palay/rice supply, which could have also helped stabilize or even ease rice prices,” he said in a Viber message.
He noted global crude oil prices have been relatively stable at $82 per barrel despite the Israel-Hamas war.
Mr. Ricafort sees October inflation at 5.6% due to high base effects. High base effects would mean slower year-on-year headline inflation starting the fourth quarter.
Headline inflation could still ease to within the 2-4% target in the first quarter of 2024, after inflation peaked at 8.7% in January 2023, he said.
BSP Governor Eli M. Remolona, Jr. has said inflation would likely stay above 2-4% in the first half of 2024, before it starts slowing down in July.
Mr. Ella said it is possible for inflation to remain elevated next year, but he is more optimistic as inflation may return to the 2-4% target within the second quarter of 2024.
The BSP said it “will continue to closely monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy formulation.”
Last week, the Monetary Board hiked benchmark interest rates by 25 basis points (bps) in an off-cycle move, bringing the key rate to a fresh 16-year high of 6.5%. The BSP has raised the rate by 450 bps since May 2022.
The BSP sees average inflation at 5.8% for 2023, before easing to 3.5% in 2024 and 3.4% in 2025. However, officials said the BSP would revise its inflation forecasts on Nov. 16.
The BSP’s next policy-setting meeting is on Nov. 16.