MANILA -- Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said domestic inflation path has increased due to higher fuel prices and peso depreciation and may increase further because of possible electricity rate hike and impact of the proposed tax reforms.

In a briefing Friday, the central bank chief, however, said rate of price increases remains within the government’s 2 to 4 percent target for 2017 to 2019, with the average forecasts for the three-year period at 3.2 percent.

This, even as international oil prices have posted upticks on higher demand, which in turn has affected domestic fuel prices.

Also, the sustained strengthening of the US dollar has negatively impacted the Philippine peso, which on Thursday fell to its 11-year low of 51.53 against the greenback.

Since the start of the year, the local currency has depreciated by around 2.41 percent.

“The inflation outlook may still adjust upward owing in part to possible adjustment in electricity rates as well as the potential short-term impact of the government’s planned tax reform,” Espenilla said.

The BSP chief, on the other hand, pointed out that these developments “are not expected to breach the inflation target.”

“Moreover, lingering uncertainty in global economic conditions may still temper further the inflationary pressures,” he said.

As of end-September this year, inflation averaged at 3.1 percent, even with the increase last September to 3.4 percent from month-ago’s 3.1 percent due to faster increases in the heavily-weighted food and non-alcoholic beverage index as well as the alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity gas and other fuels; transport; and restaurant and miscellaneous goods and services.

In the third quarter alone, inflation averaged at 3.1 percent, same as the previous quarter but higher than year-ago’s two percent average rate. (PNA)