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October Inflation Higher at 3.5 Percent

11.07.2017

Headline inflation increased to 3.5 percent year-on-year in October from 3.4 percent in September in line with BSP staff forecasts. The resulting year-to-date average inflation rate of 3.2 percent remains within the Government’s target range of 3.0 percent ± 1.0 percentage point for 2017. Meanwhile, core inflation—which excludes certain volatile food and energy items as a means to depict underlying price pressures—eased to 3.2 percent in October from 3.3 percent in the previous month. On a month-on-month seasonally-adjusted basis, headline inflation fell to 0.2 percent in October from 0.7 percent in the previous month.

The marginal uptick in headline inflation was driven mainly by faster price increases for selected food and non-food commodities. Non-food inflation rose due to upward adjustments in electricity rates resulting from higher power generation charges and in prices of domestic petroleum products, particularly liquefied petroleum gas (LPG) and kerosene even as air and sea transport fares were reduced in many provinces. Similarly, food inflation went up as price increases for corn, meat, and vegetables offset price slowdowns for rice, fish, and fruit.

Governor Nestor A. Espenilla, Jr. noted that the latest inflation readings continue to support the BSP’s prevailing assessment of a manageable inflation environment over the policy horizon, with average inflation expected to settle near the midpoint of the 2-4 percent target range for 2017-2019. The overall inflation outlook along with conditions for output growth, domestic demand, liquidity, and credit activity, will be comprehensively reviewed by the Monetary Board on 9 November 2017 as part of the regular monetary policy assessment process.

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