Nov inflation likely up but below 1% – analysts


Headline inflation is likely to pick up this month but stay under 1 percent, analysts polled by The Manila Times said, snapping a run of record lows and prompting the central bank to keep policy rates unchanged during its final meeting for the year.

Five analysts said November inflation could settle within 0.6 percent to 0.9 percent as utility rates, fuel and food prices increased, with base effects also seen as another factor.

The outlook is within the 0.4 percent to 1.2 percent forecast range offered by the Bangko Sentral ng Pilipinas (BSP) and the 0.8 percent projected by the Department of Finance.

The rise in consumer prices stayed at a record low of 0.4 percent in October for a second straight month after steadily declining since February of this year.

Official November data will be released on Friday by the Philippine Statistics Authority.

Diana del Rosario, economist at Deutsche Bank Research, said inflation may have risen to 0.9 percent, “led by a slight increase in utility rates and food prices from the previous month.”

Metropolitan Bank and Trust Co. (Metrobank) Research analyst Mabellene Reynaldo also expects the rise in consumer prices to have increased to 0.9 percent.

“Our forecast is 0.9 percent for November on account of the broad increase in food and oil prices, coupled with the relatively lower base for the same month last year,” she said.

Inflation in November last year settled at 3.7 percent.

Consequently, the central bank’s key interest rates will likely be maintained during a Dec. 22 meeting, Reynaldo said.

Eugenia Victorino, Asean and Pacific economist at ANZ Research, expects inflation to also increase, but at a slower pace of 0.7 percent.

“Food prices have been broadly been stable. The rise in electricity generation costs should have been partially offset by the decline in oil pump prices over the month,” she said.

Victorino said ANZ Research was standing by its expectation that the central bank would maintain its policy settings through the first half of 2016 on the back of robust domestic demand.

The 0.7 percent outlook was also offered by Rahul Bajoria, economist at United Kingdom-based investment bank Barclays.

The lowest forecast of 0.6 percent came from Standard Chartered Bank economist Jeff Ng, who said this would be due to “steady food inflation, some slight increases in energy prices and changing base effects.”

Central bank Governor Amando Tetangco Jr., in explaining the central bank’s 0.4 percent to 1.2 percent projection for November, last Thursday said: “Lower domestic oil prices of gasoline, diesel and kerosene as well as decline in rice prices may continue to temper inflation impulses for the month. However, the reported higher power rates, prices of selected vegetables in Metro Manila and LPG [liquefied petroleum prices]may provide offsetting upside pressure.”

Earlier this month, the policy-making Monetary Board kept the central bank’s overnight borrowing and lending rates at 4 percent and 6 percent, respectively.

The 2015 inflation forecast, however, was cut to 1.4 percent from 1.6 percent. For 2016, the forecast was also trimmed to 2.3 percent from 2.6 percent and that for 2017 was lowered to 2.9 percent from 3 percent.


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