By Melissa Luz T. Lopez
INFLATION likely slowed sharply in November from a nine-year peak, the central bank said on Thursday, citing falling oil prices and improved rice supply despite higher transport fares.
Prices of widely used goods rose 5.8-6.6% overall last month, the Bangko Sentral ng Pilipinas (BSP) Department of Economic Research said.
This estimate jibes with government expectations that inflation has begun easing from the 6.7% multiyear peak in September and October, though it will still be faster than November 2017’s three percent.
The Philippine Statistics Authority will report latest inflation data on Wednesday.
Inflation averaged 5.1% in January-October, short of the central bank’s 5.3% upgraded full-year forecast but well above the original 2-4% target band for 2018.
“The deceleration of inflation for the month could be attributed to the sharp decline in petroleum prices, the normalization of supply conditions in rice and other agricultural commodities, and the peso appreciation,” the central bank unit said in a statement.
Fuel companies announced a series of price rollback for diesel and gasoline products in November, reflecting declines in the benchmark Dubai crude amid ample supply.
Moreover, additional rice supply after the October harvests as well as arrival of imports have brought down retail prices of the staple.
The peso also pared its losses this month, returning to the P52 level versus the dollar.
These price declines are expected to have offset higher transport costs and power rates that took effect in November, the central bank added.
The Land Transportation Franchising and Regulatory Board approved a higher P10 basic fare for public utility jeepneys in Metro Manila, Central and southern Luzon, as well as provisional fare increases for public buses plying Metro Manila and provincial routes effective November.
At the same time, the Manila Electric Co. announced a P0.1135 per kilowatt-hour increase in basic rate.
Central bank officials have noted that inflation pressures “have subsided” in recent weeks, following a mix of rate hikes and non-monetary interventions by government.
The Monetary Board has raised rates by a cumulative 175 basis points (bp) since May, with a “proactive” 25bp increase announced on Nov. 15 despite signs that inflation has begun easing, as reflected in the month-on-month rate.
Some monetary policy makers previously signalled that they can pause their tightening cycle should inflation momentum show signs of easing.
Prices of widely used goods are expected to drop next year to 3.5% — back on target — due to the looming replacement of rice import restrictions with a regular tariff scheme, a move that is estimated to bring down the headline rate by as much as 0.85 percentage point.
Still, monetary authorities said they “will remain watchful” of latest developments as they calibrate their next policy moves to ensure price and financial stability. The central bank’s Monetary Board meets for 2018’s eight and last policy review on Dec. 13.