Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. on Wednesday hailed the deceleration of November 2018 inflation to 6 percent from multi-year high of 6.7 percent in September and October.
In a message to reporters, he said rate of price increases in the 11th month this year “is very encouraging.”
“For the first time we are seeing significant negative m-o-m (month-on-month) growth after inflation plateaued at around 6.7 percent. It confirms that inflation is heading back to the 2-4 percent target range in response to decisive non-monetary measures to curb food prices as well as favorable recent developments in highly volatile international oil prices,” he said.
The Central Bank chief was referring to the measures implemented by the government like boost of supply of rice, among others, in the market, based on Malacañang's directive for the National Food Authority (NFA) to release all its rice stocks nationwide starting last September as well as the move to import more rice.
These measures were made after the upticks in rice prices due to supply issues, which, in turn, resulted to big jumps in inflation rate.
These non-monetary actions were made alongside the hikes in the BSP’s key rates, which to date totaled to 175 basis points.
Espenilla said “strong monetary action has significantly reinforced the anti-inflation process through the expectations route and a firmer peso.”
He, on the other hand, pointed out that direct impact of these monetary policy decisions “on economic activity will take a longer time to take hold.”
“There’s need to pay close attention to the core inflation trend which continue to rise through November at 5.1 percent. Monetary policy will need to stay vigilant to keep inflation under firm control amid expected strong economic growth,” he added.
Deceleration of inflation last November brought the 11-month average to 5.2 percent, way above the 2 to 4 percent target of the government from 2018-20.
Authorities expect inflation to go back to within-target levels next year.