LOWER prices of food such as rice may have tamed inflation in October, according to the Bangko Sentral ng Pilipinas (BSP).
The BSP said it now projects that October 2023 inflation will settle within the range of 5.1 to 5.9 percent. This is slower than the 6.1 percent inflation recorded in September 2023.
“Lower prices of rice, meat and vegetables along with the reduction in the prices of petroleum products could contribute to downward price pressures,” BSP said.
The increase in prices in October, BSP said, will be due to the increase in electricity prices, liquefied petroleum gas (LPG), fruits and fish.
BSP added that jeepney fares are also among the primary sources of upward price pressures in October.
“Going forward, the BSP will continue to closely monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy formulation,” BSP said.
BSP Governor Eli M. Remolona Jr. earlier alluded to this slower inflation and said it may only be short-lived, as inflation is expected to rear its ugly head soon after. (Full story here: https://businessmirror.com.ph/2023/10/25/bsp-off-cycle-rate-hike-is-on-the-table/).
Last week, the Monetary Board (MB) hiked key policy interest rates by 25 basis points to 6.5 percent to arrest the increase in the prices of goods and services.
The MB, the BSP’s highest policy-making body, decided to raise the target reverse repurchase (RRR) rate by 25 basis points effective on October 27.
With the decision, the interest rates on the overnight deposit and lending facilities will be set at 6.0 percent and 7.0 percent, respectively, according to the BSP.
Remolona cited the broadening of second-round effects of higher transportation fare and minimum wages for the need for monetary policy tightening.
Image credits: Jun Pinzon/Dreamstime