By means of Luisa Maria Jacinta C. Jocson, Reporter
INFLATION likely fell below 3% in September, the Bangko Sentral ng Pilipinas (BSP) said, as food and fuel costs fell.
The central bank’s monthly forecast showed that inflation was likely to be in the 2-2.8% range.
This would be slower than the 3.3% in August and the 6.1% a year ago.
A Business world a survey of 15 analysts conducted last week yielded an average estimate of 2.5% for September’s consumer price index (CPI). This would also be the slowest print in almost four years or since 2.3% in October 2020.
“Negative base eFTogether with lower prices of food commodities, including rice, meat and vegetables, and lower domestic oil prices, and the appreciation of the peso are the main sources of downward price pressure this month,” the BSP said in a statement.
The Philippine Statistics Authority (PSA) will release September inflation data on Friday (October 4).
“Recently available data from the Ministry of Agriculture and PSA indicate a decline in rice prices compared to last month, especially with the continued implementation of the reduction in rates.Ffs on imported rice and the decline in global rice prices,” said Metropolitan Bank & Trust Co. (Metrobank) in a report.
An executive order went into effect in July, lowering tariffs on rice imports from 35% to 15% until 2028.
In August it risesFInflation fell from 20.9% in July to 14.7%. Rice usually accounts for almost half of total inflation.
Metrobank expects rice to arriveFThis figure reaches a single digit level, possibly around 6%, amid high figures basic eFfects.
Economist Mitzie Irene P. Conchada of De La Salle University said the drop in fuel prices would also push down the prices of other key commodities.
“Inflation for September is expected to slow due to lower fuel prices. As a result, prices of food and other basic commodities have remained the same or lower,” she said in an email.
In September, adjustments to pump prices amounted to a net decrease of P0.95 per liter for gasoline, P2.10 for diesel and P2.35 for kerosene.
The peso rose 8.1 centavos from P56.111 to P56.03 per dollar at the end of September Fready at the end of August.
The central bank said lower food and fuel prices are likely to offset higher prices of fish, fruit and electricity.
“Fish prices have risen this month due to supply disruptions caused by bad weather,” Metrobank said.
“The bad weather caused by the southwest monsoon disrupted the supply of agricultural commodities, causing prices of certain vegetables to rise. With lowland vegetables such as ampalayaeggplants and carrots the most aFaffected, prices of some highland vegetables also increased,” the report said.
For September, Manila Electric Co. (Meralco) increased the overall rate by P0.1543 per kilowatt hour (kWh) to P11.7882 per kWh, compared to P11.6339 per kWh in the previous month.
Meanwhile, the BSP said the Monetary Council “will continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment.”
The improving inflation path would give the BSP room to continue its policy cuts, Metrobank said.
“This also gives the central bank more room to make two more cuts of 25 basis points (bp) at the remaining Monetary Council meetings this year to boost economic growth as inflation slows.”
The next meeting of the Monetary Board was moved from October 17 to October 16. The last meeting of the year is scheduled for December 19.
BSP Governor Eli M. Remolona Jr. said on Monday that there is room to cut rates by 50 basis points in one meeting, but this would only happen in a “hard landing” scenario.
If there is no risk of a hard landing, he pointed out that there would likely be a 25 basis point rate cut at each of the two remaining meetings.
In August, the central bank cut borrowing costs for the first time in almost four years and cut the policy rate by 25 basis points to 6.25%, down from a 17-year high of 6.5%.