The Bangko Sentral ng Pilipinas (BSP) expects annual inflation to pick up pace in October, rising to a range of between 0.8 percent and 1.7 percent due to damage and supply bottlenecks caused by recent typhoons, Bangko Sentral ng Pilipinas Governor Amando Tetangco said Tuesday.

The consumer price index, which is the main inflation barometer in the country, rose 0.7 percent in September, snapping a steady decline from February to a two-decade low of 0.1 percent in August.

"This forecast incorporates the estimated impact on agricultural output of typhoons Ondoy (Ketsana) and Pepeng (Parma), as well as increases in domestic fuel pump prices," said Tetangco in a text message to reporters.

"There may be a slight uptick in our full-year baseline forecast for both 2009 and 2010 but both would still be well within their respective target ranges," Tetangco said.

The central bank has set an average inflation target of between 2.5% and 3.5% for 2009, and between 3.5% and 5.5% in 2010.

"We will consider these developments during our policy meeting next week," said Tetangco.

The central bank will hold its interest rate-setting meeting on Nov. 5. Monetary authorities had left overnight rates unchanged at 4.0 percent for borrowing and 6.0 percent for lending in its August and October meetings--held every six weeks--after a series of reductions that totaled 200 basis points.

Many economists expect the central bank to keep its policy rates unchanged until the end of the year as the country's economic recovery pace is still weak. (Dow Jones)