Inflation likely around 2% in December 2019

With the base effect from 2018’s high inflation environment wearing off, the rate of increase in prices of basic commodities in December last year likely settled at around 2 percent.

Eight of the 10 economists polled by the Inquirer last week projected headline inflation last month at the 2-percent level.

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

The highest forecast of 2.2 percent came from Oxford Economics’ Thatchinamoorthy Krshnan, who said that “despite lower rice prices from a year ago weighing on inflationary pressures, an uptick in fuel inflation and possible supply-side disruptions from adverse weather conditions should see inflation climb further in December.”

The country was battered by Typhoons “Tisoy” and “Ursula” last December.

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 year-on-year.

Neri pointed to higher pump prices last month, while Mapa said that there was a “less subdued pace” of food deflation.

Ricafort noted that “prices of some seasonal food items went up due to the Christmas holiday season, when demand usually picks up but to seasonally go down thereafter, especially ham.”

Meanwhile, 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 nonfood segment,” as Hsieh noted of a month-on-month hike in electricity prices.

On the other hand, Ateneo de Manila University’s Alvin P. Ang sees inflation in December at 1.9 percent year-on-year given that “the seasonal spending is reasonably higher on all items as consumers have generally more income to spend for the traditional activities.”

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.” —Ben O. de Vera INQ