November inflation seen at 0.9-1.4%

Inflation likely remained low and below 1.4 percent in November even as the year-on-year rate inched up compared to previous months due to high base effects.

Eleven economists polled by the Inquirer last week projected the rate of increase in prices of basic commodities last month to have had settled within the range of 0.9 percent and 1.4 percent.

The government will release the November headline inflation data on Thursday. Dec. 5.

Sun Life Financial’s Patrick M. Ella had the lowest forecast of 0.9 percent year-on-year—although slightly higher than the three-and-a-half-year low actual inflation rate of 0.8 percent recorded in October.

To recall, monthly inflation peaked to a nearly decade-high 6.7 percent year-on-year in September and October last year before sliding down starting November.

“We continue to see stable prices over the month—in fact, it’s flat to slightly contracting,” Ella said.

Capital Economics’ Alex Holmes projected 1.1 percent “because fuel-price inflation is set to rebound as the high base from last year slips out of the annual comparison.”

Bank of the Philippine Islands’ Emilio S. Neri Jr., Oxford Economics’ Thatchinamoorthy Krshnan, Philippine National Bank’s Francisco G. Trinidad Jr. and Rizal Commercial Banking Corp.’s Michael L. Ricafort shared the same forecast of 1.2 percent year-on-year.

“Higher cost of electricity was not enough to push headline inflation significantly higher as food prices generally remained stable during the month,” Neri said.

Krshnan partly attributed his forecast to lower global oil prices, while Ricafort also pointed to reports of further declines in palay prices amid liberalized rice trade.

For Trinidad, “recent price upticks can be traced to elevated food prices due to the ASF (African swine fever) effect, effects of recent typhoon shocks on fruits and vegetables, and firmer demand.”

“The latest inflation will confirm the 2018 high inflation cycle has bottomed out but with a trajectory likely to settle in the lower half of the BSP’s (Bangko Sentral ng Pilipinas) inflation target range” of 2 to 4 percent for 2019, Trinidad said.

Four economists projected November inflation at 1.3 percent year-on-year: Ateneo de Manila University’s Alvin P. Ang, BDO Unibank Inc.’s Jonathan L. Ravelas, ING Bank Manila’s Nicholas Antonio T. Mapa and Security Bank’s Robert Dan J. Roces.

“We did notice a drop off in pork prices while substitutes such as beef, dressed chicken and select fish items were pricier as consumers switched to these other forms of protein,” Mapa noted.

For his part, Roces said “higher demand at the onset of the holiday season caused price spikes for certain goods and services, which, in turn, offset the strength of the Philippine peso for the month [that made imports less expensive and should decrease inflation].”
The highest forecast of 1.4 percent was partly attributed by ANZ Research’s Mustafa Arif to “a roughly 5-percent month-on-month increase in Meralco electricity costs over the month.” INQ