Price dynamics pitting fuel, electricity and key agricultural commodities on one hand and a weaker peso on the other are at work in September making inflation barely changed during the month at a best-case Bangko Sentral ng Pilipinas (BSP) inflation forecast of 5.3 percent.
But the risk is high that inflation should instead accelerate to 6.1 percent during the month although rice and meat prices have significantly improved during the period.
“The BSP projects September 2023 inflation to settle within the range of 5.3 to 6.1 percent. Higher prices of fuel, electricity, and key agricultural commodities, as well as the peso depreciation are the primary sources of upward price pressures in September,” BSP governor Eli Remolona Jr. said in a forecast released Friday.
Headline inflation averaging a record high 8.7 percent in January steadily fell in the first seven months, averaging a 16-month low of only 4.7 percent in July, boosting hopes the fiscal and monetary measures gained traction.
But inflation, or the rate of change in prices, unexpectedly reversed in August to 5.3 percent and well above the consensus rate of 4.7 percent on account of food prices rising the most in five months by 8.1 percent from only 6.3 percent in July.
The BSP said lower rice and meat prices could contribute to downward price pressures in September.
“Going forward, the BSP will continue to monitor developments affecting the outlook for inflation and growth in line with its data dependent approach to monetary policy formulation,” it said.
