Economists say inflation likely rose in October
Economists expected inflation to have picked up in October as the peso weakened alongside higher food prices following two strong typhoons.
“Our forecast for October inflation is 2.6 percent amid a general increase in the price of food items, except rice, and higher gasoline prices,” Metrobank Research analyst Pauline May Ann E. Revillas said. The government will release the October inflation figure on Friday.
In September, inflation rose 2.3 percent, the fastest in 18 months, as prices of food and non-food items picked up ahead of the holiday season. In October last year, meanwhile, the rate of increase in prices of basic goods hit a record-low of 0.4 percent amid the downward spiraling global oil prices during that time.
For Japanese financial giant Nomura, “we’re forecasting 2.5 percent for headline inflation due to rising oil prices, the weaker peso and core inflation holding up given strong domestic demand,” economist Euben Paracuelles said. The peso slid to seven-year lows in October amid jittery global markets ahead of a looming US Federal Reserve rate increase, coupled with “uncertainties” in the domestic front brought about by President Duterte’s controversial rhetoric against top trading partners such as the United States and the European Union.
Three economists see inflation in October at 2.4 percent, just slightly higher than the September figure.
“The impact of rising world oil prices is expected to have pushed the consumer price index (CPI) inflation rate for October to 2.4 percent with recent typhoons affecting agricultural production and food prices,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit. Typhoons “Karen” and “Lawin” hit mostly agricultural areas in Northern Luzon this month.
“With inflation still at the lower end of the Bangko Sentral ng Pilipinas’ inflation target range, the central bank is expected to stay on hold at its next meeting,” Biswas added. The Monetary Board, the BSP’s highest policymaking body, will tackle the policy rate on Nov. 11. In end-September, inflation averaged 1.6 percent, below the 2-4 percent target for 2016.
Banco De Oro Unibank chief market strategist Jonathan L. Ravelas also said that consumer prices likely rose 2.4 percent year-on-year last October.
“We expect Philippine headline inflation to have marginally risen to 2.4 percent year-on-year in October. Vegetable prices are still rising on supply concerns due to limited harvests. Meanwhile, consumer pump prices have been raised, adding to the upside pressure in headline price gains,” ANZ Research economist for South and Southeast Asia Eugenia F. Victorino said.
“This will still keep the 2016 average inflation below the central bank’s inflation target range. We reiterate our expectation for the central bank to maintain its policy settings through the end of 2016 and pencil in a rate hike in the third quarter of 2017,” Victorino added.
But for University of Asia and the Pacific economist Victor A. Abola, October inflation was likely the same as September’s 2.3 percent. “Higher fuel prices will be offset by milder rice prices and slightly lower electricity rates. [There were] no special movements in other items,” Abola explained. —Ben O. de Vera
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.