BSP: Inflation likely eased in November 2018

MANILA, Philippines — Inflation may ease this month from a near-decade high of 6.7 percent in October due to the sharp decline in oil prices, improving supply of rice and other commodities, and the strong rebound of the peso, according to the Bangko Sentral ng Pilipinas (BSP).

The central bank’s Department of Economic Research (DER) said inflation in November may range between 5.8 and 6.6 percent.

“The deceleration of inflation for the month could be attributed to the sharp decline in petroleum prices, the normalization of supply conditions in rice and other agricultural commodities, and the peso appreciation,” the BSP said.

However, it said the easing could be offset in part by the adjustments in jeepney and bus fares as well as higher electricity rates in Meralco-serviced areas.

Inflation averaged 5.1 percent in the first 10 months as it steadied at a near-decade high of 6.7 percent in October due to the implementation of Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the weakening peso as well as higher oil and food prices.

Based on its latest assessment, the BSP’s Monetary Board sees inflation averaging 5.3 percent this year after factoring in the fare and wage hikes before easing to 3.5 percent next year due to non-monetary measures including the rice tarriffication and the possible suspension of the excise tax hike on oil.

The central bank has raised benchmark rates by 175 basis points in five consecutive rate-setting meetings since May to rein in inflationary pressures.

The next and last rate-setting meeting of the Monetary Board is scheduled on Dec. 13.