Inflation eased to a two-month low of 3.3 percent in November, the government reported on Tuesday.
The result, attributed to slower food price hikes, was lower than October’s 3.5 percent. It was still higher than the 2.5 percent recorded a year earlier.
November inflation was the lowest since August’s 3.1 percent and brought the year-to-date figure to 3.2 percent, above the midpoint of the government’s 2 percent to 4 percent target.
Economists polled by The Manila Times had an average forecast of 3.2 percent. The Department of Finance also had a 3.2 percent estimate while the Bangko Sentral ng Pilipinas (BSP) had a forecast range of 2.9-3.6 percent.
The National Economic and Development Authority (NEDA) noted that the slowdown in consumer price growth had snapped four consecutive months of acceleration.
Citing Philippine Statistics Authority (PSA) data, the NEDA said food and non-alcoholic beverage inflation eased to 3.2 percent in November, down from the previous month’s 3.6 percent and the lowest recorded since October 2016.
The slowdown was attributed to lower prices of vegetables, sugar, jam, honey, chocolate and confectionery, fruits, oils and fats, and rice.
“We are starting to see year-on-year price declines for ampalaya, cabbage, carrots, tomato, white potato, and imported garlic in the National Capital Region. This signifies that supply is starting to stabilize again,” Socioeconomic Planning Secretary Ernesto Pernia also said in a statement.
Non-food inflation, meanwhile, slightly increased to 3.3 percent in November from the previous month’s 3.2 percent.
Core inflation, which strips out volatile food and fuel prices, climbed to 3.3 percent from 3.2 percent in the previous month and 2.4 percent a year earlier.
Year-to-date core inflation settled at 2.9 percent, the PSA reported.
Commenting on the result, Bangko Sentral Governor Nestor Espenilla Jr. said the November easing was expected.
“We’re still on track with 3.2 percent inflation for 2017, just about the midpoint of [the]target range,” he said in a message to reporters.
The NEDA said data for the last eleven months indicated that full year inflation would settle slightly above the midpoint but remain well within the 2 to 4 percent target
“This already considers expected price spikes owing to holiday season spending this December,” Pernia said.
Risk to the near-term outlook, meanwhile, will come from both the domestic and external fronts.
Higher oil prices are expected given the Organization of Petroleum Exporting Countries’ decision to extend output cuts, while higher domestic power and fuel prices will also continue to exert pressure on inflation.
“Overall, however, the inflation outlook for full year 2017 remains supportive of the current economic growth momentum of the country,” Pernia said.
Australia’s ANZ Research, meanwhile, said demand-pull inflationary pressures remained elevated. Average inflation, it added, could stay in upper half of the 2 to 4 percent target through 2018.
“The passage of the tax reform, which is expected to raise transport and energy costs and selected food prices, will likely add to the upside risks in headline inflation prints. However, the timing of the tax reform will be key in the adjustment of our forecasts,” it said.
ANZ Research also said that strong domestic demand was entrenched and added that credit growth continued to rise, nearly reaching the highs of 2011.
“With the government ramping up on infrastructure spending, fundamental imbalances are deepening. As such, we believe that tighter monetary policy is necessary. We still expect interest rate hikes to commence in the first quarter,” it said.