BSP sees Oct inflation at 3.2-3.7%

Inflation likely stayed above three percent in October due to rising pump prices of petroleum products, higher utility rates and the weak peso.

The Bangko Sentral ng Pilipinas (BSP) said inflation in October would range between 3.2 and 3.7 percent amid rising oil prices as well as higher electricity and water rates.

Both the Maynilad Water Services Inc. and Manila Water Co. have obtained the approval of the Metropolitan Waterworks and Sewerage System (MWSS) to raise rates as part of the foreign currency deposit adjustments (FCDA).

The FCDA allows concessionaires to recover losses or give back gains resulting from the fluctuations in the value of the peso against the dollar.

“Increases in domestic petroleum prices, electricity rates in Meralco-serviced areas, and water rates in Maynilad- and Manila Water-serviced areas, as well as the weaker peso could contribute to upward price pressures for the month,” the central bank’s Department of Economic Research said.

However, the central bank said inflation would fall within the two to four percent target set by the BSP.

The peso is the worst performing currency in the region, depreciating more than three percent as it breached the 51 to $1 level as early as August.

Inflation kicked up to a five-month high of 3.4 percent in September from 3.1 percent in August amid faster price adjustments in food.

Inflation averaged 3.1 percent in the first nine months. Based on its assessment last Aug. 10, the BSP’s Monetary Board sees headline inflation averaging 3.2 percent between 2017 and 2019.