Inflation likely peaked to 5-month high in September

Most economists expect inflation to have hit a five-month high in September due mainly to higher oil prices and weak peso.

Four economists polled by the Inquirer last week said the rate of increase in prices of basic goods could have reached 3.3 percent year-on-year last month, while two economists and a think tank projected 3.2 percent.

That meant the inflation rate in September would be the highest since the 3.4-percent uptick reported in March and April, as well as a jump from 2.3 percent during the same month last year.

Banco De Oro Unibank Inc. chief market strategist Jonathan L. Ravelas, Bank of the Philippine Islands vice president and chief economist Emilio S. Neri Jr., Nomura economist Euben Paracuelles as well as IHS Markit Asia-Pacific chief economist Rajiv Biswas shared the forecast of 3.3-percent inflation in September.

“Prices of utilities (electricity, gas and water) may have resumed their climb due mainly to higher global oil prices (last month),” Neri explained.

“Rising world oil prices have pushed up retail petrol and diesel prices in the Philippines during September, and are expected to be a key factor pushing up the headline CPI inflation rate from 3.1 percent in August to 3.3 percent in September,” Biswas noted.

Neri also pointed out that “the peso actually appreciated in September from August,” although the domestic currency remained at 11-year lows, trading at the 50-51:$1 levels.

ING Bank Manila senior economist Joey Cuyegkeng is expecting a 3.2-percent rise in inflation last month, blaming the same factors cited above.

Ateneo de Manila University economics professor Alvin P. Ang said the rate likely inched up also to 3.2 percent “because of increases in power rates in Meralco areas,” while “for the rest of the year, we increased our forecast slightly due to the wage increases.”

London-based Capital Economics, which placed its forecast at 3.2-percent, said in a Sept. 29 report that in emerging Asia, “central banks will be in little hurry to raise interest rates” mainly because of “the subdued outlook for inflation, which is likely to remain low across most of the region throughout 2018.”