The Bangko Sentral ng Pilipinas (BSP) said on Tuesday it will take a “measured approach” in its policy easing cycle as annual inflation accelerated in October on higher food and transport prices.
The consumer price index rose 2.3 percent in October from the previous month’s 1.9 percent print, the Philippine Statistics Authority (PSA) said on Tuesday.
Core inflation, which strips out volatile food and energy items, was at 2.4 percent in October, steady with September’s rate.
Last month’s inflation print brought average inflation in the first 10 months of the year to 3.3 percent, within the BSP’s 2 percent to 4 percent target range.
The BSP said in a statement inflation will trend closer to the lower end of its target, even as risks to the outlook for next year and 2026 shift to the upside.
“The Monetary Board will maintain a measured approach in its easing cycle to ensure price stability conducive to sustainable economic growth and employment,” the BSP said.
An inflation rate within the BSP’s target range would help justify further easing to match rate cuts of the US Federal Reserve, said Michael Ricafort, an economist at Rizal Commercial Banking Corp.
In October, BSP Governor Eli Remolona flagged the possibility of a third quarter-point rate cut at its final meeting for the year next month, and up to 100 basis points of additional cuts next year.
The PSA said the increase in overall inflation was primarily influenced by heavily-weighted food and non-alcoholic beverages, which was recorded at 2.9 percent in October compared to the 1.4 percent in September.
The National Economic and Development Authority (NEDA) said the 3.3 percent average is “comfortably within the government’s target range of 2.0 to 4 percent,” as it assured the government is working to ensure food availability at stable prices.
NEDA Secretary Arsenio Balisacan said the recent weather disturbances, including the onslaught of Tropical Storm Kristine, posed a challenge to the country’s food supply chain and logistics.
Secretary Ralph Recto of the Department of Finance (DOF) assured the public the country is still on track with its inflation target for 2024, adding “intensive monitoring and mitigation of price increases on food and non-food items, are expected to keep inflation within our target range for the next two years, at least.” Secretary Recto said.
Rice inflation has accelerated to 9.6 percent in October from 5.7 percent last September mainly due to the base effects from the implementation of Executive Order (EO) No. 39 or the imposition of a mandated price ceiling on rice, which led to an overall price decrease in October of last year. However, the DOF expects this to be temporary.
The retail price of rice has continuously declined since the implementation of EO No. 62 or the reduction of rice tariffs from 35 percent to 15 percent in July 2024.
Overall retail rice prices are expected to further ease in the coming months as more and cheaper imported rice is expected to enter the market.
The DOF is seeing a decline in rice prices in the international market, following the lifting of the export ban of India announced in late September.
Prices of other food items remain broadly stable, including pork which registered lower inflation of 3.5 percent from 3.7 percent in the previous month.
Non-food inflation is also currently on a downtrend. This is the third consecutive month that an easing of non-food inflation was recorded.
