BSP sees November inflation at 2.2-3%

Headline inflation may have accelerated in November but still remained within the 2-4% target band, the Bangko Sentral ng Pilipinas (BSP) said.

The central bank’s month-ahead forecast showed that inflation likely settled within the 2.2%-to-3% range in November, slower than the 4.1% print in the same month a year ago.
However, the upper end of the forecast would be faster than the 2.3% recorded in October.

The Philippine Statistics Authority (PSA) is scheduled to release November inflation data on Dec. 5.

“Increased prices of vegetables, fish, and meat due to unfavorable weather conditions, higher electricity rates and petroleum prices, and the depreciation of the peso are the primary sources of upward price pressures this month,” the BSP said in a statement.

The Philippines was hit by several storms this month. Latest data from the Agriculture department showed that agricultural damage due to tropical cyclones Nika, Ofel and Pepito reached PHP 785.68 million.

In November, pump price adjustments stood at a net increase of PHP 1.7 a liter for gasoline, PHP 3.2 a liter for diesel and PHP 1.6 a liter for kerosene.

Manila Electric Co. (Meralco) also raised the overall rate by PHP 0.4274 per kilowatt-hour (kWh) to PHP 11.8569 per kWh in November from PHP 11.4295 per kWh in October.

The peso sank to the PHP 59-per-dollar level twice this month so far, hitting the record low on Nov. 21 and 26.

The BSP earlier attributed this to the stronger dollar amid rising geopolitical tensions.

On the other hand, the risks to the inflation outlook are seen to be offset by lower prices of rice, the central bank added.

National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said on Friday that inflation is expected to “stay comfortably” within the 2-4% target range.

“We don’t think that the (November) number will breach our target of 2-4%,” he said, though noted that if there is a pickup in prices, this would be “marginal.”

Mr. Balisacan also noted the BSP’s easing cycle will support the economy.

“We expect the BSP’s decision to cut policy rates by a cumulative 50 basis points and reduce reserve requirements to boost liquidity to spur growth in private spending,” he said.

“Particularly on big-ticket consumer items and investments in capital-intensive infrastructure in the coming quarters, which we see as another significant economic growth driver.”

The BSP said it “will continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment.”

Since August, the central bank has reduced borrowing costs by 50 basis points, bringing the key rate to 6%. – Luisa Maria Jacinta C. Jocson, Reporter