Cost of food, utilities rose in October; Bangko Sentral not alarmed
Inflation rate accelerated in October to a four-month high of 5.2 percent on higher cost of food and utilities, after typhoons disrupted supplies.
The Bangko Sentral ng Pilipinas is likely to keep its key interest rates steady, saying the higher inflation was a “one-off blip.”
Inflation stood at 4.8 percent in September.
The National Statistics Office said inflation in the first 10 months of the year averaged at 4.8 percent, using the 2006 price series. The Bangko Sentral set an inflation target of 3 percent to 5 percent for the year.
The consumer price index in October using 2000 as the base year rose 5.3 percent, rising from the previous month’s 4.6 percent.
Europe’s debt crisis and a struggling US recovery have clouded the outlook for the global economy, prompting Asian nations from China to Indonesia to leave rates unchanged or cut borrowing costs.
Bangko Sentral Governor Amando Tetangco said the October inflation was within the central bank’s forecast range.
“As expected, higher annual increments for food and utilities caused inflation in October to rise faster than the month before. As we explained before, this blip is expected to be one-off due to base effects and the impact of supply disruptions due to the weather disturbances,” Tetangco said in a text message to reporters.
“We continue to see inflation to be manageable over the policy horizon. Nevertheless, we remain watchful of the impact of developments in Europe on investor sentiment and global aggregate demand. Even as we see current monetary policy settings appropriate, we have flexibility to make adjustments as necessary, especially to help preserve the growth objective,” he said.
The NSO attributed the higher inflation rate to higher annual increases in prices of food and non-alcoholic beverages; alcoholic beverages and tobacco; and housing, water, electricity, gas and other fuel indices.
Annual inflation in the National Capital Region rose to 4.9 percent in October from 4.2 percent in September due to higher increases in the indices of food and non-alcoholic beverages; housing, water, electricity, gas and other fuels; and health.
Inflation outside of Metro Manila picked up to 5.3 percent in October from 5 percent in September on higher prices of food and non-alcoholic beverages, increased water and electricity rates and rising gas and fuel prices.
“Domestically, there’s no urgent need to change monetary policy,” Prakriti Sofat, a Singapore-based economist at Barclays Capital, said before the release. “Inflation will ease in the next few months and is going to be within the central bank’s target for next year. Our bias is that the BSP will keep rates unchanged until the first half of 2012.” With Bloomberg, Elaine R. Alanguilan, Manila Standard Today
