Philippine headline inflation likely went up in October due to the increase in some food items and electricity rates, analysts polled by The Manila Times said.
Analysts forecast inflation to settle at 2.4 percent, slightly higher than the 2.3-percent consumer price growth in September this year and the 0.8 percent recorded in October 2019.
The Bangko Sentral ng Pilipinas (BSP) earlier projected inflation to settle between 1.9 to 2.7 percent.
The Philippine Statistics Authority (PSA) will release official October inflation data on November 5.
Security Bank Corp. Chief Economist Robert Dan Roces gave a forecast range of 2.2 to 2.6 percent (2.4 percent average).
“An uptrend in pork prices due to cases of the Asian swine flu (ASF) have been observed.
The impact of weather disturbances also put some price pressures on select food items, though price movements in the overall food basket remain mixed,” Roces said in a report.
Roces said electricity rates also went up during the month and a spike of electricity demand in Meralco service areas was also reported.
Meralco raised its per kilowatt-hour (kWh) rate for households consuming 200 kWh
monthly by P0.1212 last month.
Aside from some uptick in electricity rates and food prices, Roces said transport costs as well are expected to have provided some upward contribution to price growth as mobility, especially from public transport, improved with looser restrictions.
“If realized, average inflation year-to-date will remain at 2.5 percent which is also our forecast for full-year 2020,” he said.
Rizal Commercial Banking Corp. Chief Economist Michael Ricafort, for his part, also attributed the slight uptick to the increase of prices of some agriculture products, higher electricity rates and possible pick up in demand and prices of some basic commodities and other Yuletide holiday products in preparation for the Christmas season.
“Damage to agriculture largely brought about by the series of typhoons that hit the country in October 2020 may have resulted in some pick up in prices especially of food and other agricultural products, which have a significant weight on the inflation basket,” he said.
“Latest moves to further reopen the economy including easing of restrictions on public transportation and continued improvement in some economic data may have led to some pick up in demand and prices in the economy,” added Ricafort.
Ricafort, however, said that any uptick in inflation may be offset by the relatively slower economic recovery amid social-distancing and other stringent measures to prevent the coronavirus disease 2019 (Covid-19) from spreading.
‘Palay’ prices and US dollar
He said the gradual easing of palay prices and rice retail prices in recent months and the slightly stronger peso exchange rate versus the US dollar could also offset the uptick.
Latest PSA data show that rice prices declined in the first week of October, with the average retail price of regular milled rice dropping to P37.04 per kilogram from P37.25 per kilogram the week before.
For the coming months, inflation would remain benign to range 2.3 to 2.4 percent until November 2020 and possibly a little less than 2 percent in December 2020 up to January 2021 largely due to higher base effects, partly supported by relatively slower economic recovery as Metro Manila remains at GCQ (general community quarantine) for the month of November 2020,” said Ricafort.
ING Bank Manila Senior Economist Nicholas Mapa, meanwhile, said base effects alongside slightly higher food prices, transport costs and education expenses will be the likely drivers for the slight uptick in headline inflation.
He said, however, that on the downside, softer prices for recreation and utilities can be expected.
“We continue to believe that headline inflation numbers may currently run slightly faster than actual inflation on the ground. Given that PSA estimates inflation based on a fixed-weight basket, headline inflation numbers may not be able to capture the natural shift of consumers during the pandemic,” said Mapa.
“We can surmise that Filipinos are now shifting expenses away from items such as transport and recreation (due to quarantines) to expenditures related to basic goods such as food, which are now seeing a slight deceleration in prices, reflective of depressed domestic demand,” he added.
According to Mapa, demand may bounce ahead of the holidays but base effects in November and December “coupled with still anemic demand may push headline lower to close out the year and into 2021.”
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