October inflation seen fastest in 3 years
Consumer prices in October likely rose at its fastest pace in almost three years mainly due to higher oil and transport costs coupled by a weak peso, according to most economists polled by the Inquirer last week.
The highest inflation forecast for October was 3.6 percent year-on-year by Standard Chartered Bank economist for Asia Chidu Narayanan.
ANZ Bank’s Sanjay Mathur, IHS Markit Asia-Pacific chief economist Rajiv Biswas, ING Bank Manila senior economist Joey Cuyegkeng and Banco De Oro Unibank Inc. chief market strategist Jonathan L. Ravelas projected 3.5 percent.
A check with Philippine Statistics Authority data showed that if the October headline inflation rate would hit at least 3.5 percent, it would be the fastest rate of increase in prices of basic goods since November 2014’s 3.7 percent.
“The reason for the rise in headline inflation is higher transport costs and, possibly, higher utility costs,” Mathur said.
“Headline CPI (consumer price index) inflation pressures have been pushed up by peso depreciation and further increases in world oil prices, as the price of Brent crude rose from around $56 per barrel at the beginning of October to a two-year high of $61 by the end of October,” said Biswas.
Rising world oil prices have resulted in further increases in retail petrol and diesel prices in the Philippines in October, he added.
The peso slid to fresh 11-year lows in October, hitting 51.77:$1 on Oct. 25, the weakest since July 25, 2006’s 51.87:$1.
Cuyegkeng also blamed higher energy and food prices as well as utility rates for the accelerating inflation.
Land Bank of the Philippines market economist Guian Angelo S. Dumalagan expects the October inflation at 3.4 percent, “driven by higher oil prices, the peso’s depreciation, and weather related supply constraints on agricultural products.”
“Weaker government spending, however, potentially tempered the rise in consumer prices,” Dumalagan added.
DBS Bank Ltd. economist Gundy Cahyadi’s projection was a slightly slower at 3.3 percent.
“We expect [inflation] to remain steady at around 3.3-3.5 percent until the end of the year. Risks are the upside given recent move in global crude oil prices,” Cahyadi said,
The Bangko Sentral ng Pilipinas earlier said it expected inflation in October to be within the 3.2-3.7 percent range.
Citing the projection of its Department of Economic Research, the BSP attributed the higher forecast range for this month partly to “increases in domestic petroleum prices, electricity rates in Meralco-serviced areas, and water rates in Maynilad-and Manila Water-serviced areas.”
The weaker peso could also contribute to the upward price pressures during the month, the BSP said in an earlier statement.
The forecast range for October was above the BSP’s projection of between 2.8 percent and 3.6 percent for September.
Inflation in September peaked to a five-month high of 3.4 percent, bringing the nine-month average to 3.1 percent.
The government had blamed the September inflation figure mainly to higher food prices due to weather disturbances that month.
Moving forward, “the average inflation is expected to remain within the government’s target range of 2-4 percent for the year,” the BSP had said. —BEN O. DE VERA
