October inflation seen staying below 1%

Inflation likely stayed below 1 percent in October mainly as food prices continued to ease, according to majority of the economists polled by the Inquirer last week.

Of the 11 economists, 10 placed the rate of increase in prices of basic commodities last month between the range of 0.7 and 0.9 percent.

The government will release the October inflation rate figure on Tuesday, Nov. 5.

The only economist that projected 1 percent year-on-year was Ateneo de Manila University’s Alvin P. Ang, who nonetheless noted that “food prices remained soft.”

ING Bank Manila’s Nicholas Antonio T. Mapa, BDO Unibank Inc.’s Jonathan L. Ravelas and University of Asia and the Pacific’s Victor A. Abola shared the same forecast of 0.9-percent October headline inflation—similar to September’s 40-month low rate.

Ravelas said he expected inflation to bottom out in October, while Mapa attributed his forecast to “base effects and improved weather” that would allow the heavily weighted food index to “post another month of deflation.”

To recall, monthly headline inflation in September and October last year were both at almost a decade-high of 6.7 percent.

Five economists—ANZ Research’s Mustafa Arif, Bank of the Philippine Islands’ Emilio S. Neri Jr., Moody’s Analytics’ Katrina Ell, Rizal Commercial Banking Corp.’s Michael L. Ricafort and Security Bank’s Robert Dan J. Roces—projected 0.8 percent.

Ricafort pointed to a stronger peso that pulled down prices of imported goods, even as Neri noted that “power rates ended their descent” that month.

Roces said he expected inflation to remain below the government’s 2-4 percent target range until November.

Meanwhile, Capital Economics’ Alex Holmes and Philippine National Bank’s Francisco G. Trinidad Jr. had the lowest forecast of 0.7 percent.

Holmes attributed his forecast to “another fall in fuel price inflation.”

For his part, Trinidad said: “There’s risk that lower inflation forecasts can be derailed by elevated prices of pork substitutes in response to the African swine fever (ASF) scare as the share of meat (6.3 percent) and fish (5.7 percent) products in the consumer price index (CPI) basket are not negligible. However, access to food imports would mitigate the pass-through of local food price shocks to prices of food served in restaurants and hotels.”