Slight push in November inflation likely – BSP

MANILA, Philippines —  Higher prices of key food items, costlier electricity rates, rising oil prices and the depreciation of the peso against the dollar may have pushed inflation upward in November, the Bangko Sentral ng Pilipinas (BSP) said.

In a statement, the BSP said inflation likely settled within  the 2.2 to three percent range in November.

If the upper-limit of the forecast range is realized, the November figure would beat the 2.3 percent print in October.

“Increased prices of vegetables, fish and meat due to unfavorable weather conditions, higher electricity rates and petroleum prices, and the depreciation of the peso are the primary sources of upward price pressures this month,” the central bank said.

It said, however, that lower rice prices are expected to mitigate the upward price pressures last month.

“Going forward, the Monetary Board will continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment,” it said.

BSP Governor Eli Remolona earlier said that inflation pressures “may prompt the Monetary Board to keep rates steady at their Dec. 19 meeting. But they could also consider another rate cut to support sluggish growth.“

“We can cut (rates in December) or we can pause. The move will depend on the data,” he had said. “Inflation pressures may cause us to pause a bit, but weak growth may cause us to cut.”

Remolona also said the main factor that would cause the BSP to hold rates steady is if inflation breaches the two to four percent target range in November.

“But it looks like inflation will still be within the target range,” he earlier said.

In a move to shift to a less restrictive monetary policy, the Philippine central bank has lowered rates by a total of 50 basis points since August. This brought the key rate to six percent from 6.5 percent previously.

Prior to the cuts, the BSP kept borrowing costs steady for six straight meetings starting November 2023. From May 2022 to October 2023, it hiked rates by 450 basis points to tame inflation.