THE Bangko Sentral ng Pilipinas (BSP) foresees October inflation settling within the 5.1 to 5.9 percent range, lower than the September inflation rate of 6.6 percent.
Inflation is the rate at which prices of goods and services rise as computed from the consumer price index. High inflation erodes the purchasing power of consumers as it decreases the number of goods or services they can buy with their money.
The central bank said the main factors contributing to upward price pressures in October are increased prices of electricity, LPG (liquefied petroleum gas), fruits, fish and recent jeepney fare adjustments.
Lower prices for rice, meat and vegetables, as well as reduced petroleum product costs, however, may contribute to downward price pressures.
The Philippine Statistics Authority is scheduled to release the October inflation report in early November.
The surge in rice prices was the main reason for the higher inflation rates in August and September that brought year-to-date inflation to 6.6 percent.
The BSP had previously said that the September inflation data indicated a likelihood of sustained elevated inflation in the near future due to the ongoing influence of supply shocks affecting food prices and the rise in global prices. However, inflation is expected to gradually decelerate and return to the target range of two to four percent by the fourth quarter of 2023, barring any additional supply shocks.
The high September inflation prompted the BSP to take an off-cycle action to raise policy rates by 25 basis points to 6.50 percent to tame inflation.
The BSP said risks to the inflation outlook still lean significantly toward the upside, due mainly to the potential impact of higher transport charges, electricity rates, international oil prices, and minimum wage adjustments in areas outside the National Capital Region.
Meanwhile, the effect of a weaker-than-expected global recovery as well as government measures to mitigate the effects of El Niño weather conditions could temper inflationary impulses.