Sept inflation seen at 0.4%-0.8% range – analysts

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Headline inflation likely stayed below 1 percent in September, analysts polled by the Manila Times said, as low food prices and utility rates offset fuel price hikes.

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The rise in consumer prices is expected to have settled in the 0.4 to 0.8 percent range, which should allow the central bank to keep policy rates unchanged.

Five analysts expect a slight uptick from August’s 0.6 percent result, with only one projecting a fall to 0.4 percent. The Bangko Sentral ng Pilipinas (BSP) has a wider forecast range of 0.2 percent to 1 percent for September.

Official data will be released by the Philippine Statistics Authority on Monday/Tuesday.

Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI), said inflation in September likely rose slightly to 0.7 percent.

“[This is] on the back of slower inflation in food items as well as utilities and transport, owing to cheaper crude oil compared to last year,” he said.

Pauline Revillas, analyst at Metropolitan Bank and Trust Co. Research, and Barclays economist Rahul Bajoria, both expect the rate to hit 0.7 percent.

“Soft prices continue to prevail in food and oil commodities. We expect the BSP to keep rates steady until yearend,” Revillas said.

At the upper end of range projected were University of Asia and the Pacific economist Dr. Victor Abola and Accord Capital Equities Corp. analyst Justino Calaycay Jr.

Abola, who has a 0.8 percent forecast, cited stable to lower food prices and electricity rates, which more than offset higher pump prices last month.

“Although the projected inflation rate for the year will be below the band of the BSP and next year’s will be just below the mid-point of that band, the BSP will not likely change policy rates, special deposit account [SDA] rates, as it belongs to the ‘ultra-conservative’ breed of central bankers who are overly focused on inflation and practically do not give importance to employment,” Abola explained.

Calaycay, who provided a 0.6 percent to 0.8 percent forecast range for September, said supply side pressures should introduce some upward bias to consumer prices.

“Moving forward, we can look at the possible impact of the El Nino on food prices, which could add to headline numbers,” he said.

Providing the lowest forecast of 0.4 percent was Security Bank Corp. economist Patrick Ella, who did not provide an explanation for his forecast.

August’s 0.6 percent inflation result was an all-time low, falling from 0.8 percent in July. A year earlier the rise in consumer prices was 4.9 percent.

Central bank Governor Amando Tetangco Jr., in explaining the BSP’s 0.2 percent to 1 percent projection for September, said: “Downward adjustments in power rates and the modest decline in rice prices could offset the effect of a weaker peso during the month.”

The BSP expects full-year inflation to average 1.6 percent this year, picking up to 2.6% in 2016 and 3 percent the year after.

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