October inflation forecast at 3.5%

MANILA — Inflation rate for October 2017 is seen to further increase to 3.5 percent from the five-month high 3.4 percent rate in September.

IHS Markit Asia Pacific Chief Economist Rajiv Biswas said the weakening of the Philippine peso against a US dollar and the rising fuel prices in the world market have driven inflation pressures last month.

Biswas noted that Brent crude rose from around USD56 per barrel at the start of October to a two-year high of USD61 per barrel at end-October.

“Rising world oil prices have resulted in some moderate further rises in retail petrol and diesel prices in the Philippines in the month of October, contributing to pushing up the headline consumer price index (CPI) inflation rate from 3.4 percent in September to 3.5 percent in October,” the economist said.

“With headline CPI inflation pressures gradually creeping up towards the upper end of the Bangko Sentral ng Pilipinas’ (BSP) target inflation range, the combination of strong domestic demand, rapid growth in consumer credit and upside risks to inflation are likely to result in the BSP having a tightening bias for monetary policy settings in late 2017 and early 2018,” added Biswas.

He noted that the possible policy change of the central bank will focus on the macroeconomic conditions in the Philippines rather than the movement in the US Federal Reserve.

Inflation rate target for this year ranges from two to four percent.