Economists see December inflation settling at 2 percent

The rate of increase in prices of basic commodities in the last month of 2019, December, was likely to settle at a minimum 2 percent with the effects of 2018’s high inflation wearing off.

Eight of 10 economists polled by the Inquirer last week projected headline inflation last December to be at least 2 percent.

The Philippine Statistics Authority (PSA) will release the official December and full-year 2019 inflation figures on Tuesday (Jan. 7).

The highest forecast was 2.2 percent from Oxford Economics’ Thatchinamoorthy Krshnan.

He said despite lower prices of rice in 2019 “an uptick in fuel inflation and possible supply-side disruptions from adverse weather conditions should see inflation climb further in December.”

The Philippines was battered by two destructive storms last December—Tisoy and Ursula.

BDO Unibank Inc.’s Jonathan L. Ravelas, Bank of the Philippine Islands’ Emilio S. Neri Jr., ING Bank Manila’s Nicholas Antonio T. Mapa, and Rizal Commercial Banking Corp.’s Michael L. Ricafort shared the same forecast of 2.1 percent inflation last December.

Neri pointed to higher pump prices as culprit while Mapa said there was a “less subdued pace” of decline in food prices.

Ricarfort said demand, normally high during the holiday season, kicked up prices of some food items although prices were likely to go down after the holidays when demand ebbs.

Barclays’ Angela Hsieh, Security Bank’s Robert Dan J. Roces, and Sun Life Financial’s Patrick M. Ella projected December inflation at 2 percent.

Ella said that there were “mild gains across the non-food segment,” as Hsieh noted an increase in electricity rates.

Ateneo de Manila University’s Alvin P. Ang saw inflation in December at 1.9 percent year-on-year but as a result of “seasonal spending” which was “reasonably higher on all items as consumers have generally more income to spend” during the holidays from bonuses and other added funds.

The lowest forecast of 1.7 percent, by University of the Philippines-Los Baños’ College of Economics and Management Dean Agham C. Cuevas, was “brought about mainly by increased domestic consumer spending during the season and the continued rise in world oil prices.”

Edited by TSB