Inflation forecast to start easing in 4th quarter

Inflation likely slightly slowed in October from September’s more than nine-year high of 6.7 percent, with majority of economists seeing the rate of increase in prices of basic commodities to have had already peaked during the third quarter.

Six of the nine economists polled by the Inquirer last week projected last month’s headline inflation settling at 6.7 percent and below.

The government will release the October inflation report tomorrow.

The lowest forecast of 6.4 percent year-on-year increase was by University of Asia and the Pacific economics professor Victor Abola, as “food prices have gone down significantly.”

ING senior economist Nicholas Antonio Mapa projected 6.5 percent, claiming that “inflation likely peaked in the third quarter, although the October print will remain elevated with only a gradual deceleration in price pressures going into 2019.”

Ateneo de Manila University economics professor Alvin Ang’s projection was 6.6. percent “because supply of rice and other food products have stabilized and prices have gone down as well.”

“The reason inflation is still elevated is due to the base effect from last year. Month-on-month, the increase will be much softer at 0.2 percent. Our view is that it has peaked last September … although it will remain above 6 percent for the rest of the year,” Ang said.

Michael Ricafort of Rizal Commercial Banking Corp. placed his forecast within the range of 6.4-6.7 percent, agreeing with Mapa and Ang that inflation could have possibly peaked already in the third quarter amid increasing signs of easing inflationary pressures, especially lower prices of oil, stronger peso and decline in food/rice prices.

Land Bank of the Philippines market economist Guian Angelo Dumalagan’s October inflation forecast was 6.7 percent year-on-year, “driven by faster annual increases in the costs of fuel and rice.”

For Oxford Economics senior economist Beatrice Tanjangco, inflation would ease to average 5.8 percent in the fourth quarter “as the steady tightening of monetary policy finally filters through and as the issue with higher rice prices is slowly resolved.”

However, Bank of the Philippine Islands vice president and chief economist Emilio Neri Jr. as well as Moody’s Analytics economist Katrina Ell both projected a faster rate of 6.9 percent.

“While the prices of vegetables, fish and other food items were lower in October than September, rice and petroleum prices continued to rise month-on-month. Lower prices in electricity, petroleum and rice felt over the last two weeks of October were, unfortunately, not big enough to offset the surge during the earlier weeks of October,” Neri explained.