BSP sees faster inflation rate in Q4 2019

BSP sees faster inflation rate in Q4 2019
File photo of BSP Head Office in Manila. (Photo courtesy of BSP)

By Joann Villanueva

The Bangko Sentral ng Pilipinas (BSP) said Friday a slowdown of the September inflation rate to 0.9 percent from the previous month’s 1.7 percent is expected for the third quarter. It, however, cited a possible rise in the last quarter of the year.

In a statement, the central bank said actual inflation rate last month is within its forecast range for the month at 0.6 percent to 1.4 percent, primarily on account of the drop in the prices of rice and electricity rates.

“The latest inflation outturn is likewise consistent with the BSP’s prevailing assessment that inflation will continue to decelerate in Q3 2019 and pick up slightly in the remaining months of 2019,” it said.

Average inflation in the first nine months this year stood at 2.8 percent, below the mid-point of the government’s 2 percent to 4 percent target rate until 2021.

Inflation in September 2018 was at 6.7 percent, the same as the October 2018 level and the peak last year.

The slower headline inflation rate last September was mirrored by core inflation, which excluded volatile oil and food items, after it decelerated to 2.7 percent from 2.9 percent in the previous month.

Core inflation averaged at 3.4 percent to date while core inflation in September 2018 was at 4.7 percent.

The BSP expects average inflation this year “to firmly settle within the target range of 3 percent ± 1.0 percentage point for 2019-2021.”

Its policy-making Monetary Board (MB), during its rate-setting meet last September 26, slashed the central bank’s average inflation forecast this year to 2.5 percent from 2.6 percent during its meeting last August 8 due to expectations of sustained slower rate of price increases.

The statement said “recent volatility in global crude oil prices due to geopolitical tensions in the Middle East could generate upward price pressures over the near term.”

It, however, pointed out that “deepening trade tensions between China and the US, along with other countries in the region, have raised global economic uncertainty, which poses a downside risk to the inflation outlook.” “The BSP will continue to keep a close watch over latest economic developments here and abroad to ensure that the monetary policy stance remains consistent with the BSP’s price stability objective while being supportive of economic growth,” it added. (First published by PNA, Oct. 4, 2019)

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