Inflation likely slowed for the second straight month in November after easing sharply to 4.9 percent in October from 6.1 percent in September, according to private economists.
Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines, said the rise in the prices of essential goods and services likely cooled to 4.2 percent in November.
'Lower food and oil prices would be the two main reasons for the disinflation narrative to continue. Better weather conditions resulting in easing food supply constraints and the persistent decline in global oil prices due to supply issues within major supplier OPEC+ have enabled disinflation to tarry along,' Asuncion said.
Headline inflation averaged 6.4 percent from January to October, well above the two to four percent target range of the Bangko Sentral ng Pilipinas (BSP).
Inflation has stayed above the target range for 19 straight months and even peaked at 8.7 percent in January. It last fell within the target range at four percent in March 2022.
The chief economist from the Aboitiz-led bank also said core inflation may ease further to 4.9 percent in November from 5.3 percent in October.
'This means more for the longer-term expectation for headline inflation. Nonetheless, what remains certain is that we will not see a smooth, linear monthly path toward the BSP's inflation target of four percent or less amid ongoing geopolitical risks that curbed material downside risk to oil prices,' Asuncion said.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said headline inflation likely settled at 4.3 percent in November and could further ease for the remainder of the year and early 2024.
Ricafort cited the higher base effects, lower global crude oil prices that led to rollbacks in local diesel and gasoline prices, the weaker dollar that help reduced the costs of imports, better weather conditions, and some easing of food prices.
However, Ricafort noted some pickup in local and world rice prices partly due to some risk brought about by El Niño within the fourth quarter of the year to the first quarter of next year that could reduce rice and other agricultural output.
According to Ricafort, the seasonal demand in preparation for the Christmas holiday season could lead to some pickup in the prices of Noche Buena products.
Bank of the Philippine Islands lead economist Jun Neri said inflation likely slowed to 4.3 percent last month that could prompt the BSP to keep interest rates unchanged anew this month.
'We think the BSP can pause in its next meeting, but numerous upside risks could still translate to more hikes in 2024, including those related to climate change, geopolitical tensions, and post-COVID adjustments,' Neri said.
China Bank chief economist Domini Velasquez said the rise in the prices of basic goods and services may have decelerated to 4.4 percent in November, primarily driven by the decline in prices of meat and vegetables.
However, Velasquez said certain key food items, such as fish and fruits, experienced price increases which contributed to the upward pressures on inflation.
She added that rice prices rose last month, reversing the decline observed in October.
According to Velasquez, significant increases in LPG prices and power rates erased the decline in the domestic pump prices of fuel products since October.
Likewise, she said electricity rates saw substantial increase in Luzon and Visayas on top of the slight increase in power costs in areas serviced by Meralco.
'Looking ahead, in December, inflation will still likely fall above the BSP's target. But in the first quarter of 2024, we will likely see inflation nearer the three percent level, before moving above four percent again from April to August. This trend is largely driven by base effects,' Velasquez said.
She pointed out that positive developments in the inflation front would likely keep the BSP from hiking its policy rate again this year.
ING Bank senior economist Nicholas Mapa said inflation likely moderated to 4.4 percent in November as supply conditions improve, highlighting the importance of using supply side remedies to address supply side problems.
'The BSP will likely take this development into consideration for monetary policy going forward given its data driven mandate,' Mapa said.
Security Bank chief economist Robert Dan Roces also believes inflation softened to 4.4 percent, propelled by elevated food and electricity prices, but partially mitigated by a decline in oil costs.
'Our latest estimates show a return of price growth in the heavy-weight food index, as well as in electricity costs, plus an upward trend in restaurant and accommodations costs in a demand build-up toward the holidays, offsetting a noticeable decline in pump prices last month,' Roces said.
While the base effect from last year's inflation should pull down the headline, Roces pointed out that the central bank would likely remain vigilant for upside risks.
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