Philippine headline inflation likely decelerated to between 3.9 percent and 4.3 percent in October from 4.4 percent in September due to continued declines in food and petroleum prices during the period, according to private analysts polled by The Manila Times.
Official data for October inflation is due for release by the Philippine Statistics Authority today.
Oil price rollbacks, port decongestion
“We’ve had a series of rollbacks in fuel prices lately, and the port congestion that was once, rightfully or otherwise, cited as a source of inflationary pressures, has been largely solved, so we think the number for October should drop to the 3.9 percent to 4.2 percent range,” Justino Calaycay, analyst at Accord Capital Equities Corp., said.
Economists at the Bank of the Philippine Islands (BPI) said they are looking at 4.1 percent for October, mainly due to declines in food prices, such as those of rice and vegetables, as well as power generation costs, compared with their year-earlier levels.
“We are looking at 4.1 percent largely due to lower food and petroleum prices. We think this will allow the BSP [Bangko Sentral ng Pilipinas] to hold the rates again at their December meeting,” said BPI lead economist Emilio Neri Jr.
Nicholas Antonio Mapa, associate economist at BPI said the acceleration in the rise of prices in October likely slowed from the months when overall inflation moved close to the upper end of the central bank’s 3 percent to 5 percent inflation target range.
“With rice imports coming in and better harvests helping augment supply, the acceleration in the prices of these items slowed to some extent,” Mapa added.
Meanwhile, ING Bank Manila said it expects October inflation to indicate movement within the 4.1 percent to 4.2 percent range as week-on-week price indicators show a softening in rice and other food prices, as well as a drop in the retail prices of oil products.
“These would maintain the downtrend in inflation even as power rates were higher last month. Inflation risks have moderated but the BSP continues to monitor price pressures in order to assess the need for more pre-emptive action,” said Joey Cuyegkeng, senior economist at ING Bank Manila.
Global bank HSBC sees headline inflation for October coming in at 4.2 percent on weaker food and declining transportation prices.
Key interest rates seen steady
“The central bank is likely to keep rates on hold at the last meeting of the year on decelerating price pressures,” Trinh Nguyen, economist at HSBC, said.
Security Bank Corp. estimates the inflation figure to have eased to 4.3 percent from the year-on-year rate of 4.4 percent from September, expecting commodity prices to have been capped as a growth slowdown in the eurozone and in China must have contributed to the waning of demand for oil.
Crude prices will continue to drop “also due to US shale oil production gains. Overall, this should keep domestic inflation contained and returning to a normalized 3.7 percent to 4.5 percent range, which has been seen in the past 12 months to 18 months,” Security Bank said.
Rahul Bajoria, economist at UK-based investment bank Barclays, also sees inflation at 4.3 percent in October but did not elaborate.
BSP’s forecast is 3.7% – 4.6%
For its monthly forecast, the central bank said it expects inflation to continue decelerating in October from a peak of 4.9 percent in July and August and 4.4 percent in September, with improved supply conditions resulting in lower food and oil prices.
The BSP’s forecast for October inflation is an average between 3.7 percent and 4.6 percent.
The BSP provides regular monthly forecast bands for inflation, besides its projected range for the year, which for full-year 2014 was set at 3 to 5 percent.
Specifically, full-year inflation is seen by the central bank at 4.4 percent, down from its previous forecast of 4.5 percent. For 2015, the forecast has been adjusted downward to 3.7 percent from 3.8 percent, while that for 2016 has been cut to 2.8 percent from 3 percent.