BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said inflation could have hit between 4.5 percent and 5.3 percent in October, after easing to 4.8 percent in the previous month.
Diokno told reporters on Friday that inflation in October was largely driven largely by the upward adjustments in domestic oil prices. Higher Meralco electricity rates, increased fish and fruits prices, and the peso depreciation will provide additional upside pressures, he added.
However, these could be partially offset by the continued decline in rice and meat prices, reflecting continued arrival of pork imports.
“Moving forward, the BSP will continue to closely monitor emerging price developments to help ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” the BSP governor said.
BSP’s forecast points to a still elevated inflation rate during the month, despite the slight easing in September. The government’s target inflation rate for the year is at 2 to 4 percent.
Security Bank economist Robert Dan Roces, meanwhile, said inflation likely accelerated again in October to hit 4.9 percent.
“The main factors come from food and utilities. On the food basket, fruits and upland vegetables are pricey but offset by pork and lowland vegetables. For utilities, this may have accelerated 0.5 percent month-on-month on the back of higher electricity costs,” Roces said.
“Primary upside risks include global oil price movements, which may translate to pressures on transport and utilities. Food remains elevated and remains susceptible to any supply snags, such as a delay in meat imports,” he added.
In a BSP survey released earlier this month, 21 bank economists forecasted average inflation in the country to hit 4.3-percent—further away from the 2- to 4 percent target band for 2021 and higher than the 4.1-percent average forecast just three months prior.
According to the BSP, analysts expect inflation to remain above the upper end of the government’s target range in 2021, with upside risks including supply disruptions brought about by the reimposition of stricter quarantine measures, adverse weather conditions during the rainy season, persistence of the African swine fever, rising global crude oil prices, and weakening of the peso against the US dollar.
The expectation could be tempered, however, by potentially subdued domestic demand due to low purchasing power brought about by high unemployment and the prolonged and stricter lockdown measures amid the local transmission of the Delta variant, which could weigh down on recovery efforts.