Karen Lema & Neil Jerome Morales

MANILA (Reuters – The annual Philippine inflation fell to a 3-month low in October. This gives the central bank some breathing room. It can keep its policy accommodative until then to help economic recovery.

According to government data, the Consumer Price Index increased 4.6% in October from one year ago, down from 4.8% in September. This was due to lower food inflation and higher energy prices, according Friday’s government data.

October inflation was near the bottom of the forecast by the central bank at 4.5%-5.3%. It also fell below the median 4.9% estimate from Reuters.

The core inflation excludes volatile fuel and food prices. It rose to 3.4% in September from 3.3%.

The average inflation rate was 4.5% from January to October. This is above the 2%-4% target range set by the Bangko Sentral ng Pilipinas for the year.

The BSP anticipates that inflation will remain high and driven by supply-side forces for the remainder of 2021. However, it expects that the headline number will return to the same target range in 2022-2023.

Benjamin Diokno (BSP Governor) reiterated that the central bank will continue to be accommodative as needed to help the economy recover.

Since November, the benchmark rate at 2.0% has been maintained by BSP.

Jonathan Ravelas (BDO Unibank Chief Market Strategist) stated, “We are still in the core inflation range of 2%-4%, and that gives central banks the space to keep the accommodative program,” news channel ANC reported.

According to the BSP, its announcement schedule will change to 3:00 p.m. (0700 GMT) to better align with other central bank decisions, which are usually made during trading hours.

This new schedule will take effect at the policy meeting on Nov. 18.

The statistics agency also reported that the nation recorded a trade deficit in September of almost $4 billion. This is the largest since January 2019. It was due to imports rising faster than exports.