The Bangko Sentral ng Pilipinas (BSP) projects lower inflation in September within 2 to 2.8 percent from 3.3 percent in August.
The forecast range hits the most ideal points of the BSP target band of 2 to 4 percent.
BSP said the possible decline would likely stem from cheaper prices of several food items, including rice, meat and vegetables.
Price drop
According to the Philippine Statistics Authority, rice prices already dropped to 14.7 percent in August from 20.9 percent in the previous month, following the implementation of a lower tariff on imported rice at 15 percent from 35 percent.
“The tariff reduction translates into a 20 percent discount on imported rice that could further ease inflation,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.
Meanwhile, prices of vegetables, tubers and bananas also declined to 4.3 percent in August from 6.1 percent.
Price freeze
Although recent typhoon “Enteng” or “Yagi” damaged some farms and disrupted food transportation, Ricafort said government order for price freeze in areas under state of calamity could temper price increases.
BSP added stable oil prices would help lower overall inflation as other imported goods and transport fares remained more affordable.
Union Bank of the Philippines chief economist Carlo Asuncion shared that global crude oil prices have been stable at $70 per barrel from $80 per barrel.
Cheaper imported goods
The BSP said cheaper imported goods last month were also possible after the peso strengthened against the US dollar, falling to around 56 from 58 in May.
However, BSP said prices of fish, several fruits and electricity remained high.
“Going forward, the BSP Monetary Board will continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment,” the central bank said.
BSP Governor Eli Remolona Jr. said he is considering easing the BSP policy rate to private banks by another 25 basis points this month or in December to spur more business activities while keeping prices affordable for better economic growth.
The BSP Monetary Board reduced its rate in August to 6.25 percent after consumer spending slowed in the second quarter to 4.6 percent from 5.5 percent in the same period last year.