MANILA, Philippines – Higher fuel and food prices as well as the weaker Philippine peso mainly pushed the country's inflation rate in October 2017 to its fastest pace in almost 3 years, data from the Philippine Statistics Authority (PSA) showed.
Inflation, the movement of prices of basic goods and services, accelerated to 3.5% in October, higher than 2.3% in the same month in 2016 and 3.4% in September this year.
The country's inflation rate in October was the highest since November 2014, when it registered 3.7%.
"We still expect full-year inflation to stay within our target of 2% to 4%," Socioeconomic Planning Secretary Ernesto Pernia said in a statement.
"However, upside risks become more prominent as the holiday season approaches. This warrants close monitoring of the rising prices in domestic petroleum as well as utility rates."
The National Economic and Development Authority (NEDA) said in a statement that inflation in the food subgroup reached 3.8% in October, from 3.7% in September, due to faster price increases in corn, meat, and vegetables.
"Higher prices for corn and vegetables may be traced still to the lingering effects of Typhoon Jolina (Pakhar), Tropical Depression Maring, and Typhoon Paolo (Lan)," Pernia said.
"On the other hand, higher prices of meat can be attributed to the import ban on Brazilian meat products, affecting domestic meat production costs," he added.
In October, NEDA recorded a surge of domestic prices for liquefied petroleum gas (26%), as well as diesel (22.8%) and kerosene (13.2%).
Pernia said crude oil prices may rise further in the near-term due to the continuing increase in global oil demand.
Latest PSA data showed commodity groups that booked higher annual increments in October include alcoholic beverages and tobacco (6.8%); housing, water, electricity, gas and other fuels (4%); communication (0.4%); recreation and culture (1.5%); as well as restaurant and miscellaneous goods and services (2.6%).
Excluding volatile food and energy prices, core inflation eased to 3.2% in October this year, from 3.4% in September. (READ: ADB retains PH growth outlook, sees no signs of economy overheating)
The October inflation rate was announced two days before the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) holds its rate-setting meeting on Thursday, November 9.
For BSP Governor Nestor Espenilla Jr, the inflation rate still remains manageable over the policy horizon despite the uptick in October.
"Firm domestic economic activity, ample liquidity, and well-anchored inflation expectations continue to support within-target inflation," Espenilla told reporters.
The October inflation rate fell within the BSP's forecast of 3.2% to 3.7% and within the government's inflation target of 2% to 4% for 2017.
Espenilla gave an assurance that monetary authorities would stay vigilant against risks to the inflation outlook.
ING Bank senior economist Joey Cuyegkeng said he expects interest rates to remain unchanged this year and increase by 50 basis points in 2018. – Rappler.com