MANILA: Lower food and oil prices as well as distortions from high-base effects might have pulled down inflation to the 2% level in September, giving the Bangko Sentral ng Pilipinas (BSP) space to further slash borrowing costs.

In a statement, the BSP said consumer price increases last month likely settled between 2% to 2.8%.

If the projection of the central bank comes true, the figure that will be reported by the Philippine Statistics Authority tomorrow will be lower than the 3.3% inflation recorded in August.

At the same time, it means that price increases last month averaged within the 2% to 4% target range of the central bank.

The BSP said most of the downward price pressures in September came from cheaper food items like meat, vegetables and rice.

Rice is a staple grain for Filipino households.

Other drivers of the softer inflation last month include lower oil prices and a rallying peso, which brings down the cost of importation of key commodities.

The central bank also said that the drop in inflation last month might have been induced by “negative base effects” from a year ago, when the price hike was at a high of 6.1%.

 - ANN