Headline inflation slowed down anew to 2.8 percent year-on-year in October from 3.5 percent in September. The resulting year-to-date average inflation rate decelerated to 4.0 percent from 4.1 percent, remaining well within the Government’s target range of 3.5-5.5 percent for 2010. Core inflation, which excludes certain food and energy items to measure broad-based price pressures, also dropped to 3.3 percent from 3.8 percent in the previous month. Meanwhile, month-on-month headline inflation was unchanged in October from the previous month at -0.2 percent.
The October data showed most commodity groups posting lower inflation readings. Food inflation went down mainly due to lower meat inflation with adequate supply of chicken and pork, and lower prices of fruits and vegetables, as supply remained ample despite some damage wrought by Typhoon “Juan” in a few localities. Inflation for light also went down due to the lower cost of power supply driven by improved power plant capacity, appreciation of the peso, and seasonally low demand due to cooler weather. Meanwhile, the impact of higher global crude oil prices on domestic pump prices of petroleum products led to higher inflation for transportation and communication services.
According to Governor Amando M. Tetangco, Jr., the October inflation number, which was within the BSP’s forecast range for the month, gives monetary authorities additional confidence that inflation will remain manageable within the policy horizon. However, he stressed that the BSP will continue to watch closely for emerging price pressures in order to safeguard price stability.