Inflation could hit historic 7.9% this month, BSP says

Inflation could surpass 13-year highs this month given the higher commodity prices during the month, the Bangko Sentral ng Pilipinas (BSP) said Monday.

The central bank projects inflation to settle within the 7.1% to 7.9% range this month, higher than the 6.9% logged in September. This would also mean that inflation would breach the 2% to 4% target for the seventh straight month.

Should it settle at the upper band of the range, it will surpass the 7.2% recorded in February 2009 at the height of the global financial crisis.

“Inflation pressures for the month are expected to emanate from transport fare hikes, elevated domestic petroleum prices, higher agricultural commodity prices due to recent typhoons, and the depreciation of the peso,” the BSP said.

Fares for most forms of public land transportation were hiked effective October 3, as approved by the Land Transportation Franchising and Regulatory Board (LTFRB).

Pump prices of petroleum products were also hiked twice during the month — a major increase on October 11, and another on October 18.

The Department of Finance (DOF) and the Philippine Statistics Authority (PSA) also earlier said they expect inflation to remain high in the remainder of the year, due to the weak peso and the damage caused by Typhoon Karding (international name: Noru).

The Philippine peso hit an all-time high of P59:$1 this month, its worst showing against the US dollar. It closed last Friday at P57.48:$1.

The BSP noted, however, that the higher prices could be offset in part by the lower electricity rates implemented by the Manila Electric Company, lower prices of liquefied petroleum gas, and lower prices of fish.

“More importantly, inflation is projected to gradually decelerate in the succeeding months as the cost-push shocks to inflation due to weather disturbances and transport fare adjustments dissipate,” it said.

“Looking ahead, the BSP will continue to monitor closely emerging price developments to enable timely intervention that could help prevent the further broadening of price pressures in accordance with the BSP’s price stability mandate,” it added.—AOL, GMA News