October Inflation is Steady at 0.4%

Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—Headline inflation was unchanged at 0.4% year-on-year in October from the September level, and was within the BSP’s range forecast of 0.1-0.9% for the month. The resulting year-to-date average inflation rate of 1.4% is below the government’s inflation target range of 3.0%t ± 1.0 percentage point for 2015.

Meanwhile, core inflation—which excludes certain volatile food and energy items to better capture underlying price pressures—increased to 1.5% in October from 1.4% in the previous month. On a month-on-month seasonally-adjusted basis, the change in the consumer price index also went up by  0.3% from -0.1% in September.

Inflation in October held steady as price declines for bread and cereals, as well as the downward adjustment in electricity charges were counterbalanced by higher prices of selected food and non-food items. Food inflation was unchanged as lower prices of rice, corn, along with oils and fats were accompanied by price increases of meat, fish, and vegetables—partly due to some tightness in domestic supply caused by recent weather disturbances.

It is expected that the impact of Typhoon “Lando” on prices would be reflected more fully in succeeding months. Meanwhile, year-on-year non-food inflation was nil in October after decreasing in the previous month as the slight uptick in inflation for clothing and footwear—as well as those in the services sector, particularly transport, outpatient, and hospital services—was enough to offset the negative inflation outturns in electricity, gas, and other fuels along with operation of personal transport equipment.

Governor Amando M. Tetangco Jr. said that while it may appear that there is room to ease policy settings given the relatively lower inflation outturn at the moment, risks to the inflation outlook remain, including price pressures due to El Niño and financial market volatilities that may result from global portfolio rebalancing as financial markets await policy action from the US Federal Reserve Bank.  Moving forward, the BSP will closely monitor price developments to ensure price stability conducive to a balanced and sustainable economic growth.

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