Inflation likely peaked at 3-yr high 3.5% in October

MANILA, Philippines — The Department of Finance (DOF) said yesterday inflation likely accelerated to 3.5 percent in October, the highest in almost three years, due mainly to higher prices of utilities.

Finance Undersecretary Gil Beltran said the inflation rate likely rose to 3.5 percent in October, higher than the 3.4 percent growth a month ago and 2.3 percent a year ago.

“Inflation may have peaked at 3.5 percent in October. This is due to the acceleration in the prices of the non-food groups, in particular, the utilities subgroup,” Beltran said.

Based on DOF estimates, prices of alcoholic beverages and tobacco products likely increased 6.7 percent, up from 6.4 percent last month.

He said prices of housing, utilities, and fuels may have also risen to 4.1 percent, up from 3.8 percent last month, while prices of electricity, gas and other fuels may have picked up to 9.2 percent from 8.2 percent.

Electricity rates, in particular, increased to P9.28 per kilowatt hour from P9.25 in September, according to the Manila Electric Co. (Meralco). The company’s generation charge in October also climbed to P4.72 per kWh from P4.54 a month ago.

Despite the projected rise in inflation, Beltran said consumer prices in the coming months would remain manageable with the expected harvest of palay in the latter part of the year.

“Food inflation may decline further in November 2017 as the rice harvest season has started pushing down domestic rice prices,” Beltran said.

For October, Beltran said food prices have already started to slide down to 3.5 percent from 3.6 percent in September.

Inflation in September settled at a five-month high of 3.4 percent from 3.1 percent in August, driven by higher food prices during the period.

This brought the average inflation in the first nine months to 3.1 percent, still within the government’s target range of two to four percent this year.

The manageable inflation environment, coupled with robust domestic growth, prompted the Monetary Board to keep the benchmark interest rates steady.