Oil prices kept inflation above target in October — BSP

Oil prices have soared as the economic recovery from the pandemic has pushed energy usage higher. — Photo by Michael Varcas, The Philippine Star

By Jenina P. Ibanez, Reporter

Inflation in October likely exceeded the central bank’s annual target largely due to domestic oil price pressures, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Friday.

Inflation will likely settle within the 4.5%-5.3% range, breaching the 2-4% BSP target for the year, he said in a Viber message to reporters. Inflation went up 2.5% in October last year.

Headline inflation was at 4.8% in September 2021, slowing from the year-on-year rate of 4.9% in August.

Mr. Diokno said higher Meralco electricity rates, increased prices of fish and fruits, and the depreciation of the peso added to the upward inflationary pressure.

“These could be partially offset by the continued decline in rice and meat prices, reflecting continued arrival of pork imports,” he said.

Earlier this week, pump prices of gasoline rose by P1.15, diesel by P0.45, and kerosene by P0.55 per liter, reflecting the continued surge in global oil prices.

As of Thursday’s market close, Brent crude was steady at $82.36 a barrel. Reuters reported that crude oil was on track for its “first weekly fall in eight weeks after US oil stocks rose more than expected and Iran flagged it was resuming talks with Western powers which could lead to an end to sanctions.”

Meralco power rates went up by P0.0283 to P9.1374 per kilowatt-hour (kWh) in October.

The Department of Agriculture on Tuesday said imported pork will be distributed to areas where prices are high, expanding beyond the capital region and its neighboring provinces.

The minimum access volume quota for pork imports has been expanded while tariff rates were temporarily lowered to address low pork supplies and rising prices due to the African Swine Fever outbreak.

Mr. Diokno earlier this month said that recent elevated inflation is still “transitory,” and that tightening monetary policy too early may cause more harm to the economy’s recovery.

“Moving forward, the BSP will continue to closely monitor emerging price developments to help ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” Mr. Diokno said on Friday.

The central bank in its September policy review kept rates steady, citing the need to support recovery even as it raised its inflation forecast for the year to 4.4%.

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