PRIVATE ECONOMISTS EXPECT A SLOWDOWN

Sept inflation estimated between 4.2% and 4.6%

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Philippine headline inflation likely slowed in September to the 4.3 to 4.8 percent range from the August level of 4.9 percent due to declines seen in food and petroleum prices, private analysts interviewed by The Manila Times said.

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The official September inflation data will be released by the Philippine Statistics Authority today (Tuesday).

“The series of roll backs in oil prices, the lifting of the Manila truck ban that has started to free up the ‘stranded goods’ at the ports; no changes in utility, transportation and food prices – should all ease the pressures felt over the last two months,” Justino Calaycay, analyst at the Accord Capital Equities Corp., said.

Given such favorable factors, Calaycay said he sees September inflation ranging between 4.3 percent and 4.6 percent.

Emilio Neri Jr., lead economist at the Bank of the Philippine Islands, cites lower electricity charges, along with declines in food and petroleum prices, as factors that could have led to a sharp deceleration in headline inflation for the past month.

The economist believes that headline inflation last month settled at 4.2 percent.

Trinh Nguyen, economist at banking giant HSBC said a favorable base effect and abating price pressures may bring inflation down to 4.4 percent in September on a year-on-year basis.

Nguyen said food price pressures are waning despite the rise in vegetable prices due to the impact of heavy rains on supplies.

The economist said a small increase on a month-on-month basis in food inflation is expected but not significant, while lower oil prices would indicate downward pressure on the overall consumer price index (CPI).

“We expect easing inflation to give the Bangko Sentral ng Pilipinas [BSP] space to pause at the October meeting,” she said, referring to the Monetary Board’s next policy meeting set for October 23.

On the other hand, Dr. Victor Abola, lead economist at the University of the Asia and Pacific, is forecasting inflation for September to settle at 4.5 percent.

“My forecast is 4.5 percent, since rice prices have started to decline, while other food prices were steady or soft. Besides, fuel pump prices have dropped significantly as Brent crude went below $100 per barrel,” he said.

On the other hand, Rahul Bajoria, economist at UK-based investment bank Barclays said inflation likely settled at 4.6 percent in September. However, the economist did not provide an explanation for his forecast.

Earlier at its monthly forecast, the central bank said it expects September inflation to show a slightly softer bias from the 4.9 percent level in July and August as price pressures on select food items seem to have eased due to some improvement in supply conditions.

The BSP said September inflation is projected to settle within the 4.1 percent to 4.9 percent range.

The BSP provides regular monthly forecast bands for inflation, apart from its projected range for the year, which for full-year 2014 was set at 3 to 5 percent.

Recently, the central bank raised its inflation forecast for 2014 to 4.5 percent from the previous forecast of 4.3 percent. For 2015, the forecast has been adjusted upward to 3.8 percent from 3.7 percent and that for 2016 was lifted to 3 percent from 2.8 percent.

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