INFLATION CREEPS UP TO 3.1% IN OCTOBER
MANILA, November 6, 2003 (STAR) By Rica D. Delfinado - Consumer prices went up to 3.1 percent in October from 2.9 percent in September due to the latest weakening of the peso against the dollar, higher crude oil prices and the seasonal uptick in food prices, the National Statistics Office (NSO) reported yesterday.
Despite the rise, Socioeconomic Planning Secretary Romulo Neri remained optimistic the inflation would remain stable at an average rate of three percent, lower than the 4.5-percent to 5.5-percent target for the whole of 2003.
"Inflation pressure is expected to average around 3.1 percent in the next two months," Neri said. "The depreciation of the peso, higher crude oil pries and the seasonal uptick in food items are the main causes of inflation pressure," he added.
The Bangko Sentral ng Pilipinas (BSP) said the latest rate was well within its projected range for the month and that the benign inflation trend supported its neutral monetary policy stance.
BSP Governor Rafael B. Buenaventura had predicted annual inflation in October would come in at 2.9 to 3.1 percent.
"The weakening peso might have had a marginal effect, but inflation has moderated over the course of the year and the BSP (central bank) would have to be satisfied," said David Cohen, director for macroeconomic forecasting at MMS International.
Economists have said they expect price rises to stay below the official target of 4.5 to 5.5 percent this year, but some quarters warned that the pesoís weakness could translate into imported inflation in early 2004.
They said the BSP was likely to keep its policy rates steady given the pressure on the peso and interest rates from rising political risk as candidates and parties begin jostling for votes in the run-up to next Mayís election.
The BSPís overnight borrowing rate is 6.75 percent and its lending rate is nine percent.
"The BSP can maintain its current monetary policy stance," BSP Deputy Governor Amando Tetangco said.
Steve Brice, chief economist for Southeast Asia at Standard Chartered in Singapore, said he expected consumer prices to rise in coming months because of the lagging effect of a weaker peso.
"Itís still very benign overall, not suggestive of any need for a tightening rate policy," he said.
"We expect inflation to accelerate next year. With a 4.5 percent forecast for GDP (gross domestic product growth) from four percent this year, the risks are to the upside, also with exports doing a lot better," he said.
The government statistics office said prices in areas outside Metro Manila remained flat from the previous month while NCR prices went up by 0.5 percent, caused largely by the abrupt increase in prices of fruits and vegetables.
Neri said the havoc wrought by typhoon Haricot in the Cordillera Autonomous Region affected the supply of fruits and vegetables in Metro Manila causing prices of off-season fruits such as mangoes, latundan bananas, calamansi and papaya to increase. Ė With Reuters
Reported by: Sol Jose Vanzi
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