Inflation looks a bit faster in October.

By Luz Wendy T. Noble, Reporter

INFLATION may have picked up slightly in October due to an increase in food prices and transportation costs, as well as the impact of the base effects.

A survey of 15 economists conducted Business world last week it returned a median estimate of 2.4%, near the upper end of the 1.9-2.7% forecast given by Bangko Sentral ng Pilipinas (BSP) and well within the 2-4% goal this year.

If done, the median estimate will be slightly faster than 2.3% in September and 0.9% in October 2019. The latest BSP average inFloridaThe share forecast for this year is 2.3%.

The Statistics Authority of the Philippines will publish October inFloridaaction data on Thursday.

Analysts said that upside risks from higher prices for some food groups could have caused inFloridaaction to accelerate slightly last month.

“Recent typhoons couldffect the rebound in the prices of some basic products such as vegetables. The prices of meat products such as pork and chicken remain high due to limited supply, ”said Mitzi Irene P. Conchada, an economist at De La Salle University in Manila.

Two typhoons hit the country in late October. The Department of Agriculture said the damage to fisheries from typhoons Pepito and Quinta reached P67.57 million and P2.2 billion, respectively. The most affected areas include some provinces of Central Luzon, Calabarzon (Cavite, Laguna, Batangas, Rizal, Quezon) and the Bicol Region.

Last week, the agency raised the suggested retail price (SRP) of several cuts of pork sold in Metro Manila to make up for shortages caused by African swine fever. The new SRP for pork shoulder, known as kasim, is now at P260 per kilogram (from P230), while the SRP for pork belly, or time, was set at P280 per kilogram (from P250).

An increase in rates and transportation costs may also have contributed to accelerating inFloridain October, as travel restrictions were eased and more economic activities resumed, analysts said.

“Transportation costs are expected to have provided some contribution upward, as well as mobility, especially from public transportation,” said Security Bank Corp. Chief Economist Robert Dan J. Roces.

He added that the highest electricity rates in the areas served by Manila Electric. Co. (Meralco) could be another upside risk for inflation. Electricity rates for October increased P0.1212 per kilowatt-hour (kWh) to P8.55 per kWh from the previous month, Meralco said.

Other factors such as base effects and education spending in October may have also led to faster inflation, said ING Bank NV Manila senior economist Nicholas Antonio T. Mapa.

But a little faster inFloridaThe action won’t be enough to force the central bank to cut rates further, analysts say.

“A historic low local policy rate of 2.25% would still remain unusually belowFloridawhich results in negative net interest rates, which makes any further policy rate cuts more challenging at this time, ”said Rizal Commercial Banking Corp. chief economist Michael L. Ricafort.

“BSP will respond to the third quarter GDP figure instead of theFloridain this point. We expect that if Q3 GDP remains below -8% to -9%, then the BSP is likely to further lower prevailing interest rates, ”said Sun Life financial economist Patrick M. Ella.

The economy contracted by a record 16.5% in the second quarter as it succumbed to the impact of tight shutdowns during the period.

While a less pronounced contraction in GDP is expected in the third quarter as the economy gradually reopened, the government estimates that GDP will fall between 4.5% and 6.6% this year. The offiImportant third quarter GDP data will be released on November 10.

Meanwhile, Alex Holmes, an economist at Capital Economics, expects third-quarter growth data to be disappointing, adding that the BSP may be “too optimistic” about its economic outlook.

“We are still waiting for another cut by the BSP before the end of the year. Just a 25 bp (basis point) cut, bringing the monetary policy rate to 2%, ”Holmes said.

The Monetary Board will celebrate its establishment of policies on November 19, before its benal meeting of the year on December 17th.

The BSP has cut key policy rates by 175 bps this year to support the economy amid the pandemic. This has reduced overnight reverse repurchase, loan and deposit facilities to historic lows of 2.25%, 2.75% and 1.75%, respectively.

While the policy-setting body has opted for a “prudent pause” in its August and October meetings, BSP Governor Benjamin E. Diokno has said the central bank still has room for further relaxation when the crisis arises. need. He said this would allow the above actions to be absorbed into the financial system.

Diokno has also said that they will carefully assess the timing to undo aggressive policy measures taken in light of the crisis to avoid serious repercussions on the economy.