MANILA - Inflation may pick up this month as base effects from record-high commodity prices last year start to fade, the Bangko Sentral ng Pilipinas (BSP) said.

BSP Governor Amando M. Tetangco, Jr. told reporters on Monday that inflation would likely average between 0.0% and 0.9% this month from August’s 22-year low of 0.1%.

"The forecast range for September and trends seen in oil and non-oil commodity prices indicate that 2009 inflation would be well within the target range for the year," Mr. Tetangco said in a text message.

"The inflation target for 2010 is also not at risk," he added.

The central bank has previously said that inflation, which measures the rate of average price increases in a given period, would likely start picking up in September.

"Higher prices of vegetables due to recent inclement weather may have been offset by lower rice prices due to ample supply of NFA (National Food Authority) stocks and an early harvest," Mr. Tetangco said.

"Continued relatively low Dubai crude prices have also resulted in lower domestic pump prices," he added.

Food and fuel prices rose to record highs in world markets last year, driving inflation to a three-decade high of 12.5% in August last year, before easing to 8% in December.

The BSP expects inflation to average at 3% this year, or within a 2.5-4.5% target. The forecast of 2010 is 3.3%, below a 3.5-5.5%.

Mr. Tetangco stopped short of saying what the inflation forecast meant with respect to monetary policy. The central bank’s policy-making Monetary Board is scheduled to meet this Thursday.

Analysts expect the BSP to keep key rates unchanged for the second month in a row after having slashed rates by a total of 200 basis points since December.