INFLATION likely steadied in November from the preceding month on the back of higher fuel costs and electricity rates, the Bangko Sentral ng Pilipinas (BSP) said yesterday, even as it noted that a stronger peso should have eased price pressures.
The overall increase in prices of widely used goods and services likely clocked 2.9-3.6% this month, according to the BSP’s Department of Economic Research.
This assures that inflation will remain within the midpoint of the central bank’s 2-4% target band, and could even trend lower than the October’s 3.5% print which was the fastest in three years.
The Philippine Statistics Authority will report November inflation data on Tuesday.
Overall commodity price increases averaged 3.2% in the 10 months to October, matching the central bank’s full-year forecast for 2017 and keeping well within the year’s target range.
The central bank’s estimate range for November would yield a 3.12-3.18% 11-month average.
“Higher domestic petroleum prices and electricity rates in Meralco-serviced areas could contribute to upward price pressures, which could be partly offset by the slightly stronger peso for the month,” the BSP said in a statement, referring to the Manila Electric Co. — the country’s biggest electricity distributor.
Retail pump prices increased by P0.90 per liter for gasoline, P0.75 for diesel and P0.55 per liter in kerosene on Nov. 7, according to the Department of Energy’s oil monitor. The adjustments reflect higher Dubai crude rates amid signs that production cuts among oil-producing nations will be extended anew in a meeting scheduled for today.
Meralco also raised its overall rate for the fifth straight month by P0.3436 per kilowatt-hour (kWh) to cover higher generation and transmission costs. Households consuming 200 kWh — who make up bulk of Meralco’s residential customers — were expected to see a P68.72 hike in their November bills.
On the other hand, the peso returned to the P50-per-dollar level since Nov. 16, with the faster-than-expected 6.9% economic growth in the third quarter fuelling the currency’s recovery against the US dollar. The local unit has sustained its strength over the past two weeks, even hitting three-month highs as sentiment soared following the passage of the tax reform plan in Senate.
Inflation is the biggest consideration of the policy-setting Monetary Board in deciding on benchmark interest rates, now at 2.5% and 3.5% for overnight deposit and lending, respectively.
The BSP has kept its policy stance unchanged since September 2014, except for procedural adjustments introduced in June last year to usher in the shift to an interest rate corridor regime designed to better siphon unwanted liquidity and influence market rates.
Manageable inflation and firm domestic demand allowed the central bank to keep policy steady in its Nov. 9 review. BSP officials have said they would not have to match tightening moves in the United States for now, ahead of a December rate hike expected from the Federal Reserve. — Melissa Luz T. Lopez