MANILA, Philippines - Inflation came in at 3.5 percent in September, the lowest in 10 months, due to “slow annual rate of price adjustments posted in all the commodity groups,” the National Statistics Office (NSO) reported yesterday.
The September figure was below the central bank’s forecast range of 3.6 percent to 4.5 percent. It was also the lowest since the 2.8-percent annual inflation rate recorded in November 2009, and was down from the four percent recorded last August.
Core inflation, which strips out volatile food and energy items, moderated to 3.8 percent in September from 4.2 percent in August.
Price hikes for food and beverage improved to 3.2 percent from 3.5 percent in August, while those for fuel, light and water eased to 11.8 percent from 15.3 percent.
Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said in a text message to reporters that the markedly lower inflation rate in September was below the central bank forecast of 3.6 percent to 4.5 percent for the month and at the same time supports a manageable medium term inflation outlook.
“At 3.5 percent, this is a tad below the lower end BSP’s forecast of 3.6 percent to 4.5 percent for the month, and puts the BSP full year 2010 within the lower half of the target range,” Tetangco stressed.
Data from NSO showed that average inflation eased slightly to 4.1 percent in the first nine months of the year from 4.2 percent in the same period last year.
The BSP has set an inflation target of 3.5 percent to 5.5 percent this year and three percent to five percent between 2011 and 2014.
However, the central bank last Aug.26 decided to maintain this year’s inflation forecast at four percent but raised next year’s forecast to 3.25 percent instead of three percent due to the continued higher-than-anticipated economic growth in the first half, higher oil prices, petitions for electricity rate hike, the imposition of the 12 percent value added tax on toll as well as the impending MRT-LRT fare hike.
For 2012, the BSP sees inflation averaging at 2.97 percent.
Monetary authorities believe that the lower-than-expected inflation reading in September provides flexibility to the Monetary Board when it meets on Thursday to discuss the monetary policy stance.
“Barring any unforeseen price shocks, including volatility of international commodity prices, the BSP’s current stance appears appropriate. Nevertheless there continues to be a need to push for measures to improve absorptive capacity and to draw investments into employment generating projects,” Tetangco said.
He added that monetary authorities would like to make sure that the current monetary policy stance would indeed translates into real economic growth that is sustainable.
The monetary authority has signaled a benign view of inflation, suggesting it was not in a rush to tighten policy, though it emphasized the need to closely watch the potential impact of strong capital inflows on the economy.