• Sept inflation stands within 1.8%-2.2% – analysts


    Headline inflation in September likely clocked between 1.8 percent and 2.2 percent or within the government’s expectations in line with a slowdown in prices of fuel, electricity and basic commodities, according to analysts polled by The Manila Times.

    Inflation in August eased to 1.8 percent, while it stood at 0.4 percent a year earlier.

    The Philippine Statistics Authority is set to release the official numbers for September on Wednesday, October 5.

    The Bangko Sentral ng Pilipinas (BSP) is forecasting inflation to range within 1.6 percent to 2.4 percent, given the downtrend in power rates, fuel prices and basic commodities.

    However, the central bank is also betting that it could have picked up pace at 2.4 percent on upticks in the prices of rice and cooking gas and a weaker peso.

    Of the seven analysts in The Times’ survey, those from Standard Chartered Bank, Deutsche Bank and Nomura gave the highest estimates at 2.4 percent on the back of higher food prices.

    “Higher food inflation likely pushed up inflation further; housing and utilities inflation likely remained flat during the month, along with transport inflation, which was also likely flat, “StanChart economist Chidu Narayanan said. He expected the BSP maintaining neutral in monetary policy stance for the rest of 2016.

    “We see average inflation settling below the 2 percent lower bound target of the BSP in 2016, thereby, unlikely to prompt a change in monetary policy through year-end,” Deutsche Bank economist Diana del Rosario said.

    Euben Paracuelles of Nomura did not expound on his forecast.

    Betting on inflation at 2.1 percent is Rajiv Biswas, the chief economist at IHS Markit Asia-Pacific, noting the impact of base effects from last year.

    “With world oil, gas, coal and iron ore prices having risen in recent months, the upturn in prices for these major commodities is being reflected in some modest increases in wholesale price inflation in the Philippines, after significant wholesale price deflation in 2015 when commodity prices slumped, “he said.

    Although inflation remains close to the bottom of the BSP’s inflation target range of 2 percent to 4 percent, the BSP is expected to remain on h old in the near term as gross domestic product growth momentum is still very strong, he added.

    Gundy Cahyadi, DBS economist, said headline inflation likely settled at 2 percent as food inflation is currently trending about 3 percent and offsetting some of the drag prevalent in the housing, utilities and transport components of the consumer price index (CPI).

    “Given that the distortion from low oil prices is likely to dissipate going into 2017, CPI inflation should average 2.6 percent next year, up from a projected 1.6 percent this year,” he said.

    Moody’s Analytics economist Jack Chambers expects headline inflation to accelerate slightly to 1.9 percent as the drag from the fall in oil prices continues to fade.

    “As a result, transport and energy costs will start to rebound. Offsetting this to an extent will be food inflation, which should ease in the coming months as crop yields recover,” he said.

    This result would leave inflation just below the central bank’s target range, prompting Moody’s Analytics not to expect any moves from the BSP in 2016 “as it sits in the comfortable position of low inflation coinciding with rapid economic growth,” he added.

    Providing the lowest estimate of 1.8 percent is Metrobank Research analyst Pauline May Ann Revillas, noting the push and pull of price movements in the monitored commodities.

    “The movement was mixed for the prices of food items – there was a rise in the price of rice and pork, while the prices of some fruits and vegetables either rose or fell. Gasoline prices were lower year-on-year, despite the hikes during the month,” she said.


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