September inflation hits record low

CEBU, Philippines –  Philippine inflation hit a record low 0.4 percent in September due to lower fuel, transport and utility prices, the Philippine Statistics Authority reported yesterday.

Last month's headline inflation was down from the record-low 0.6 percent in August and 4.4 percent recorded in September last year.

The 0.4 percent price growth brought the nine-month average inflation to 1.6 percent, below the 2-4 percent inflation target range for 2015 and next of the Bangko Sentral ng Pilipinas (BSP).

"The downtrend was primarily due to the annual declines in the indices of housing, water, electricity, gas and other fuels and transport," the Philippine Statistics Authority (PSA) said in a statement.

"Moreover, slower annual increases were seen in the indices of all the other commodity groups except the indices of communication, recreation and culture, education and restaurant and miscellaneous goods and services," PSA added.

Core inflation, which excludes food and energy items, was at 1.4 percent last month, lower than 1.6 percent recorded in August and 3.4 percent in September last year. While month-on-month inflation in September further slowed to -0.2 percent from 0.1 percent in August.

Sought for comment yesterday, Dennis D. Lapid, deputy director of BSP's Department of Economic Research, said the low inflation was expected due to lower global oil prices.

"That's still part of our expectation," Lapid said in an interview, referring to the result.

Lapid noted the central bank expects the full-year inflation to fall below its target range of 2-4 percent for 2015.

The official said consumers could expect stable prices of goods throughout the year and that downward price pressures are further expected.

However, Lapid said a modest rise in inflation could be expected next year due to the foreseen impact of the prevailing stronger El Niño, predicted to last through the early part of 2016.

"For 2016 and 2017 we see slightly higher inflation but will still be within the target," the BSP official said.

During its last monetary policy meeting, Lapid said, the central bank had cut its inflation forecast for this year to 1.6 percent from 1.8 percent due to further decline in food and oil prices. While the forecast for next year and 2017 was hiked to 2.6 percent and 3 percent, respectively.

He said the possible impact of El Niño was already factored into BSP's forecast as the phenomenon is considered as an upside risk to inflation.

BSP Governor Amando Tetangco Jr. had said in September that the central bank kept its monetary policy stance unchanged due to benign inflation outlook and optimistic growth momentum.