The Bangko Sentral ng Pilipinas (BSP) is confident of within-target inflation this year amid any unexpected price spike in the remaining months of the year as inflation continue to decelerate.
This after rate of price increases further slowed to 11-month low of 2.8 percent last October from the previous month’s 3.5 percent.
Year-ago inflation rate is 1.6 percent. The last time the country registered a 2.8 percent inflation rate is on November 2009.
BSP Governor Amando Tetangco Jr., in a text message to reporters Friday, said actual inflation last month is close to the lower end of their 2.6-3.5 percent forecast for the month.
He said slower inflation in the food, beverages and tobacco (FBT) index “were principally the reason for the lower actual inflation rate for the month.”
Rate of price increase in the FBT index dropped to two percent last October from the previous month’s 3.2 percent.
This was accompanied by the similar path in the fuel, light and water (FLW) index, which declined to 8.3 percent from last September’s 11.9 percent.
A slight drop was also noted in the miscellaneous index, which dropped to 1.2 percent last October from month-ago’s 1.3 percent.
Further deceleration of inflation rate last October brought the year-to-date average to four percent, at the middle of the government’s 3.5-5.5 percent target for this year.
Core inflation, which excludes volatile items like oil and food, also went down after it stood at 3.3 percent from the previous month’s 3.8 percent resulting to 3.7 percent the average in the first 10 months this year.
“Barring unforeseen sudden price spikes and demand pressures in the near-term, the inflation path should lead firmly to within-target inflation over the policy horizon,” he said.
“This confirms that the current BSP policy stance remains appropriate,” he pointed out.
Central bank’s policy-making Monetary Board has maintained BSP’s policy-rates to record low since July 2009.
To date, central bank’s overnight borrowing rate is at four percent while the overnight lending rate is six percent.
“The BSP nevertheless continues to assess the operating environment, both domestic and global, to see if there are shifts in real global growth patterns and investor risk appetite, among others,” Tetangco said.
“We will adjust the policy stance as consistent with our primary mandate of price stability,” he added.
Analysts earlier predicted the BSP to start hiking rates in the first quarter this year in line with the similar decision in other economies on account of the recovery from the recent global economic turmoil.