Consumer price growth likely eased for the third straight month in November to return within the government’s target, giving the Bangko Sentral ng Pilipinas more reasons to keep its ultra-loose monetary policy settings.
In a statement released Monday night, the BSP said it projects inflation to settle between 3.3-4.1 percent range this month that, if realised, would be softer compared to 4.6 percent year-on-year uptick recorded in October.
The central bank’s forecast range indicates there’s potential for inflation in November to go back to the state’s 2-4 percent annual target, which has been breached nine times this year amid a supply-demand imbalance created by the pandemic. So far this year, it was only in July when price growth fell within the government’s target band.
Governor Benjamin Diokno had said the BSP is being “patient” and would keep the benchmark rate unchanged for a “few more quarters” since the country’s external position is robust enough to endure a capital flight while an elevated inflation remains “transitory”. At its meeting earlier this month, the powerful Monetary Board kept overnight borrowing rate at a historic-low of 2 percent in a bid to support a hobbled economy recovering from the coronavirus pandemic.
Explaining its projection, the BSP said higher electricity and LPG prices are among the sources of upward price pressures this month. To recall, Manila Electric Co. (Meralco), the largest power distributor in the country, announced a rate hike in November following a shutdown in Malampaya’s natural gas facility, a crucial energy source. Meanwhile, energy department data showed household LPG in Metro Manila are estimated to range from P862.00 to P1,074 per 11-kilogram tank this month.
Another driver of inflation this month was the uptick in the prices of meat, fish, fruits and vegetables, the BSP said, as the local farm sector grapples with a devastating combination of bad weather and African swine fever.
But offsetting rising inflation were rollbacks of local pump prices and the peso’s relative strength, which brought down import costs. Energy department data showed domestic oil companies adjusted prices four times this month, three of which were decreases.
“Moving forward, the BSP will continue to monitor emerging price developments to help achieve its primary mandate of price stability that is conducive to balanced and sustainable growth of the economy,” the central bank said in its statement.