Inflation may have peaked, says BSP deputy governor

Measures taken by the government to rein in surging consumer prices have started to make themselves felt as the inflation rate for September, though higher than the previous month’s, came in lower than most analysts’ expectations, the central bank said on Friday.

In a statement to reporters, Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said the inflation rate could have already peaked and —“barring unforeseen events” such as the continuation of the surge in international oil prices —could be the start of a decline in the pace of price hikes all the way to 2020.

“Despite the impact of Typhoon ‘Ompong,’ escalating global oil and food commodity prices, we are beginning to feel the positive impact of various nonmonetary measures, including accelerated release of NFA rice, higher importation of rice and other food commodities as well as close monitoring and surveillance of market prices against possible profiteering and hoarding,” the BSP officer-in-charge said.

Guinigundo added that initial signs of moderating growth in liquidity and credit “resulting from the appropriate open market operation” of the central bank through its various facilities designed to mop up inflationary idle cash from the financial system were starting to emerge.

In a separate statement, the central bank said the implementation of non-monetary measures, particularly the approval of rice tarrification along with additional importation of rice and other food items, “could lead to an earlier return of inflation to within the target range in 2019.”

On Friday, the government reported that inflation rose 6.7 percent year-on-year in September, its highest in more than nine years, but lower than most analysts’ expectations, some of whom were expecting the consumer price index to breach 7 percent for the month.

The rate of increase in prices of basic commodities last month was the fastest since the headline inflation rate of 7.2 percent in posted in February 2009.

Guinigundo pointed out that the September 2018 inflation rate turned out lower than the BSP’s midpoint forecast of 6.8 percent, though still within the range of 6.3-7.1 percent.

In an e-mail to reporters, ING Bank economist Nicholas Mapa echoed hopes that the local economy might have already seen the worst of the relentless price increases that began in January.

“The 6.7 percent [rate] supports our assessment that inflation is close to or has peaked for the year and is expected to taper off going into the yearend,” he said.