Sept. inflation at forecast range of 4.3%

Thursday, 27 September 2012 20:31 Jun Vallecera / Reporter

Inflation that has been accelerating since July this year was forecast to remain elevated in September, averaging from a low of 3.4 percent to as high as 4.3 percent, regulators said on Thursday.

According to Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr., much of the pressure on prices was owed to volatile oil in the world market whose full impact was dampened only by the softening of other key price drivers.

ENJOY GOOD LIFE + INVESTMENT, CLICK HERE 

 

“Our inflation forecast range for September is 3.4 percent to 4.3 percent. This continues to reflect manageable inflation pressures, as the impact of oil-price volatility is expected to be dampened by lower electricity prices and broadly stable food prices,” Tetangco said in a text message.

Expectations of sustained and higher prices in September followed a period of decelerating inflation in the opening months, when inflation fell from 4 percent in January to only 2.6 percent in March.

Inflation would later rise to 3 percent in April but moderated again thereafter to 2.9 percent in May and still lower to 2.8 percent in June, after which the rate steadily went up.

These developments would later compel the BSP to refine its forecast inflation for this year and next to
3.4 percent from 3.1 percent originally and to 4.1 percent from 3.2 percent, respectively.

Accelerated prices in the Philippines have also caused analysts at Singapore-based DBS Bank to fine-tune the country’s inflation path this year to 3.9 percent instead of 3.7 percent in its original forecast.

The recalibration was prompted in part by sustained local output in the second quarter when the economy expanded at a sustained pace of 5.9 percent from 6.3 percent a quarter earlier.

Global lender HSBC has seen accelerated growth in the third quarter and expects prices to continue to pick up during the period.

This was the reason the policy-making Monetary Board of the BSP kept policy rates unchanged at its rate-setting meeting just weeks earlier.

“While headline inflation is still within the 3-percent to 5-percent target and unlikely to breach the upper bound in 2012, headline inflation is trending upward. Most worrying is the unfavorable base effect in the first quarter of next year—should it be coupled with high demand and global commodity prices, the target would be breached,” HSBC said early this month.

Nevertheless, Tetangco gave assurance that the monetary policy settings remain appropriate and supportive of non-inflationary growth and vowed the seven-man board will remain vigilant against global or domestic developments that could upset the relative stability in local prices.