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Philippine headline inflation likely rose in October due to increases in some food and electricity rates, analysts surveyed by The Manila Times said.
Analysts forecast inflation to stand at 2.4 percent, slightly higher than consumer price growth of 2.3 percent in September this year and 0.8 percent in October. 2019.
The Bangko Sentral ng Pilipinas (BSP) previously projected that inflation would be between 1.9 and 2.7 percent.
The Philippine Statistics Authority (PSA) will release official inflation data for October on November 5.
Security Bank Corp. chief economist Robert Dan Roces gave a forecast range of 2.2 to 2.6 percent (average of 2.4 percent).
“An upward trend in pork prices has been observed due to cases of Asian swine flu (ASF).
The impact of climatic shocks also put some pressure on the prices of certain foods, although price movements in the general food basket remain mixed, ”Roces said in a report.
Roces said electricity rates also rose during the month and an increase in electricity demand was also reported in Meralco’s service areas.
Meralco raised its rate per kilowatt-hour (kWh) for homes that consume 200 kWh
monthly by P0.1212 last month.
Aside from a spike in electricity rates and food prices, Roces said that transportation costs are also expected to have contributed to the rise in price growth as mobility, especially public transportation, improved. with more flexible restrictions.
“If done, average inflation so far this year will remain at 2.5 percent, which is also our forecast for all of 2020,” he said.
Rizal Commercial Banking Corp.’s chief economist, Michael Ricafort, for his part, also attributed the slight rebound to rising prices for some agricultural products, higher electricity rates, and a possible rebound in demand and prices for some commodities and other holiday products in preparation for the holiday season.
“The damage to agriculture caused in large part by the series of typhoons that hit the country in October 2020 may have caused a rebound in prices, especially of food and other agricultural products, which have a significant weight in the basket of inflation, “he said.
“The latest moves to further reopen the economy, including the easing of restrictions on public transport and the continuous improvement of some economic data, may have led to a rebound in demand and prices in the economy,” added Ricafort.
Ricafort, however, said that any spike in inflation may be offset by the relatively slower economic recovery amid social distancing and other strict measures to prevent the spread of the 2019 coronavirus disease (Covid-19).
Palay prices and US dollar
He said that the gradual moderation in palay prices and retail rice prices in recent months and the slightly stronger peso exchange rate against the US dollar could also offset the rally.
The latest PSA data shows that rice prices fell in the first week of October, with the average retail price of regular milled rice falling to P37.04 per kilogram from P37.25 per kilogram the previous week.
Over the next few months, inflation would remain benign to range from 2.3 to 2.4 percent through November 2020 and possibly just under 2 percent in December 2020 through January 2021, largely due to at higher base effects, partly supported by a relatively slower economic recovery like Metro Manila. remains in GCQ (general community quarantine) for the month of November 2020, ”said Ricafort.
Meanwhile, ING Bank Manila senior economist Nicholas Mapa said that base effects coupled with slightly higher food prices, transportation costs and education expenditures will be potential drivers of the slight rebound in headline inflation. .
However, he said, on the downside, lower prices can be expected for recreation and utilities.
“We continue to believe that headline inflation figures may currently run a bit faster than actual inflation on the ground. Since PSA estimates inflation based on a fixed-weight basket, headline inflation figures may not capture the natural change in consumers during the pandemic, ”said Mapa.
“We can assume that Filipinos are now shifting spending on items such as transportation and recreation (due to quarantines) to expenditures related to commodities such as food, which are now experiencing a slight slowdown in prices, reflecting the depression of the domestic demand”. added.
According to Mapa, demand may rebound before the holidays, but base effects in November and December “coupled with still-anemic demand may send headlines down to close the year and enter 2021.”
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