Headline inflation was unchanged in October 2018 at 6.7 percent year-on-year from the previous month’s level. The year-to-date average of 5.1 percent is above the Government’s announced inflation target range of 3.0 percent ± 1.0 percentage point for 2018. On the other hand, core inflation—which excludes selected volatile food and energy items to measure underlying price pressures—rose to 4.9 percent in October from 4.7 percent in the previous month.
Month-on-month seasonally-adjusted headline inflation eased further to 0.3 percent in October from 0.8 percent in September, confirming the BSP’s view that inflation momentum has started to slow down.
Inflation held steady in October as inflation for food items decelerated even as it was matched by the increases in inflation recorded for non-food items. Food inflation rate moderated in October 2018 due to slower price increases of corn, meat, fruits, and vegetables. However, prices of rice and fish remained elevated posting double-digit inflation rates during the month. On the other hand, non-food inflation rose to 4.2 percent year-on-year, which could be partly attributed to higher charges for water services with the approved rebasing and foreign currency differential adjustment. At the same time, transport inflation also accelerated due to upward adjustments in the prices of domestic petroleum products, largely influenced by the higher international crude oil prices.
The latest inflation reading is within the BSP’s forecast range for the month and supports the view that inflation pressures have started to moderate. The Monetary Board will take into account this latest development and other incoming data at its next policy meeting to determine if there is a need for further policy rate adjustment in order to ensure that inflation and inflation expectations remain consistent with the inflation target over the policy horizon.