Nov inflation seen declining to 3.5-4.3%

MANILA, Philippines - Inflation is expected to decline anew this month.

Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said price increases this month likely averaged between 3.5 percent and 4.3 percent, lower than October’s forecast range of 3.7 to 4.6 percent.

 “Stable food prices, continued decline in international oil prices and lower electricity rates for the month are seen to dampen inflation pressures,” Tetangco said.

The cost of food, which make up about 40 percent of the Consumer Price Index (CPI) basket, has started decreasing on improved supply of a number of key commodities, the central bank said last month.

At the same time, the price of the Asian benchmark Dubai crude has also fallen to $80.63 per barrel during the first three weeks of November from $86.65 per barrel last month.

“As I’ve been saying, if, among others, inflation continues on this decelerating trend and if there continue to be no signs of second round effects, then there is room for BSP to pause and keep its current stance of monetary policy,” Tetangco said.

Monetary authorities last month kept key policy rates steady on expectations the inflation will remain within the goals for this year until 2016.

Earlier, the BSP hiked the overnight borrowing and overnight lending rates by a total of 50 basis points to ensure inflation will fall within the target.

The central bank has also increased the banks’ reserve requirement ratios and the special deposit account rate to rein in excess liquidity in the system.