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Saturday, November 05, 2005
Consumer prices rise; BSP sees inflation hike
MANILA - Consumer prices rose seven percent from a year earlier in October, the same pace as in September, the National Statistics Office said yesterday.
Month-on-month, consumer prices in October were up 0.5 percent over September when they rose by 0.4 percent.
The Bangko Sentral ng Pilipinas (BSP) had earlier predicted October’s inflation rate at 6.5 to seven percent with private sector estimates at 6.8 to 7.1 percent.
Ahead
The October outcome brought the average rate for the first 10 months of the year to 7.9 percent, well ahead of the government’s full-year target of five to six percent.
“The October rate is within the expected range and is consistent with the anticipated easing of inflation for the rest of 2005,” said BSP Gov. Amando Tetangco Jr. in a statement.
The BSP recently said it is expecting full-year inflation to range 7.6 to 7.9 percent, well above the target.
Cautious
Inflation in October mainly reflects rising oil prices, the statistics office said in a statement.
“We need to be cautious and continue to watch liquidity growth and possible second-round effects (of high oil cost on consumer prices),” Tetangco said.
The BSP has raised its key overnight interest rates by a total of 75 basis points between April and October to 7.5 percent for borrowing and 9.75 percent for lending—their highest levels in three years.
It will hold its next monthly monetary policy meeting on Nov. 17 amid growing fears it will raise rates again.
David Cohen, director of Asian economic forecasting at Action Economics LLC in Singapore, said he expects the BSP to hike rates by another 25 basis points before the year ends.
Exchange rate
“The central bank (BSP) may not hike rates during its next policy meeting given the encouraging inflation data in October.
However, aside from inflation, they are also sensitive to the exchange rate volatility that may result from the continued tightening (of rates in the United States),” he said.
Cohen said relatively stable crude oil prices is an encouraging development but the implementation of the Reformed Value-Added Tax law last Nov. 1, which raises fuel and electricity costs, will add to inflationary pressures. (AFP)
(November 5, 2005 issue)
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