BSP sees inflation easing in September

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) sees inflation easing further for the second straight month in September on lower rice and oil prices, as well as cheaper power rates.

The BSP’s Department of Economic Reseacrh (DER) projects a point inflation of 2.2 percent and a range of 1.8 to 2.6 percent for the month of September.

“Lower rice and oil prices, as well as Meralco power rates, along with the continued appreciation of the peso are expected to be the primary sources of downward price pressures for the month,” the BSP said.

It said the downward pressures could be partially offset by higher price of LPG.

Inflation averaged 2.5 percent in the first eight months after easing to a three-month low of 2.4 percent in August from 2.7 percent in July.

The benign inflation environment has allowed the BSP to pursue aggressive easing measures, including the 175 basis points interest rate cuts, as well as the lowering of the reserve requirement ratios to soften the blow of the COVID-19 pandemic.

Lower borrowing cost is expected to spur economic activity as companies are encouraged to borrow more to fund expansion and individuals to finance consumption. However, credit growth has slumped for three straight months to June.