By Luisa Maria Jacinta C. Jocson, A reporter
INFLATION is likely to drop below 3% in September, the Bangko Sentral ng Pilipinas (BSP) said, as food and fuel costs eased.
The central bank’s one-month forecast indicated that inflation was likely to reach 2-2.8%.
This would be lower than 3.3% in August and 6.1% last year.
A BusinessWorld a survey of 15 analysts conducted last week showed a median estimate of 2.5% for September’s consumer price index (CPI). This will also be the slowest print in almost four years or from 2.3% in October 2020.
“Bad foundation effects and low prices of food commodities including rice, meat and vegetables, as well as low domestic oil prices, and the appreciation of the peso are the main sources of the month’s price drop,” said the BSP statement.
The Philippine Statistics Authority (PSA) will release inflation data for September on Friday (Oct. 4).
“Recent data from the Ministry of Agriculture and PSA shows a decline in the price of rice since last month, mainly due to the continued use of tari reduction.ffs in imported rice and the decline in rice prices worldwide,” said Metropolitan Bank & Trust Co. (Metrobank) in the report.
The executive order, which reduced import prices on rice to 15% from 35% until 2028, took effect in July.
In August, rice infdecreased to 14.7% from 20.9% in July. Rice usually takes up about half of overall inflation.
Metrobank expects rice in the middlefrates reached single digits, around 6%, during the peak the foundation effects.
An economist from De La Salle University, Mitzie Irene P. Conchada, said that the drop in the price of fuel will also reduce the price of other essential items.
“Inflation in September is expected to decrease due to the drop in fuel prices. Because of this, the prices of food and other basic items have not changed or decreased,” he said in an email.
In September, the pump price adjustment was completely reduced by P0.95 per liter for gasoline, P2.10 for diesel and P2.35 for kerosene.
The peso gained 8.1 centavos to P56.03 per dollar at the end of September from its P56.111. fat the end of August.
The central bank said lower food and fuel prices are likely to offset higher prices for fish, fruit and electricity.
“The price of fish has increased this month due to disruption in the supply of services due to bad weather,” said Metrobank.
“The bad weather caused by southwesterly storms disrupted the supply of agricultural goods, increasing the prices of vegetables. With low vegetables like the playaeggplants and carrots afsold, the prices of certain highland vegetables have also increased,” he added.
In September, Manila Electric Co. (Meralco) increased the total price by P0.1543 per kilowatt-hour (kWh) to P11.7882 kWh from P11.6339 per kWh last month.
Meanwhile, the BSP said the Monetary Board will “continue to take a moderate approach to ensure price stability consistent with balanced and sustainable economic growth and employment.”
The improvement in the inflation path will give the BSP the opportunity to continue easing policy, Metrobank said.
“This also provides more room for the central bank to deliver another 25-basis-point (bp) rate cut at each of the remaining Monetary Board meetings this year to help economic growth as inflation eases,” he said.
The next meeting of the Finance Board has been postponed to Oct. 16 from Oct. 17. Its last meeting of the year is scheduled for Dec. 19.
BSP Governor Eli M. Remolona, Jr. on Monday said there is a possibility to reduce the interest rate by 50 bps in one meeting, but this will be done only in a “difficult” situation.
If there is no risk of a hard landing, note the chances of delivering a 25-bp rate cut during each of the remaining two meetings.
In August, the central bank cut borrowing costs for the first time in nearly four years, cutting its policy rate by 25 bps to 6.25% from a 17-year high of 6.5%.
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