Inflation could fall to as low as 2.6% this month, BSP says

INFLATION could settle lower in October, the Bangko Sentral ng Pilipinas (BSP) yesterday said, as oil price increases and higher water rates are being offset by a stronger peso and cheaper electricity.

"The BSP forecasts October inflation to fall within the range of 2.6% to 3.5%," BSP Governor Amando M. Tetangco, Jr. said in a text message to reporters.

Inflation slowed to 3.5% in September from 4% a month earlier, bringing the average for the year so far to 4.1%, within the BSP’s 3.5-5.5% target for 2010. The central bank has forecast full-year inflation to hit 3.8%.

The rise in consumer prices, said Mr. Tetangco, is expected to remain manageable.

"Based on this forecast, average inflation during the policy horizon is expected to be well-behaved, barring surprises particularly in terms of global adjustments," he said.

The central bank, however, will continue to be watchful of developments and will adjust policy needed, Mr. Tetangco said. -- L. D. Desiderio