Inflation slows to 3.3% in Nov.; BSP sees pace on track

The rate of increase in consumer prices slowed last month after four consecutive months of acceleration, data from the Philippine Statistics Authority (PSA) showed.

Headline inflation reached 3.3 percent in November this year, slower compared with 3.5 percent in the previous month, but faster than the 2.5 percent recorded in the same month last year, PSA said.

“Inflation during the last eleven months suggests that the full year average might settle slightly above midpoint, but will still be well within our target of 2 percent to 4 percent,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement.

“This already considers expected price spikes owing to holiday season spending this December,” he added.

The central bank remains confident inflation rate will average at 3.2 percent this year.

“The easing of inflation in November was expected, following October’s peak,” according to Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. “We’re still on track with 3.2 percent inflation for 2017, just about the mid-point of target range (of two percent to four percent).”

The BSP had expected November inflation could be a low of 2.9 percent versus October’s 3.5 percent, or a high of 3.6 percent.

Inflation for food and non-alcoholic beverages eased to 3.2 percent in November from 3.6 percent in the previous month, the lowest rate recorded since October last year.

Pernia said this can be attributed to lower prices of vegetables, sugar, jam, honey, chocolate and confectionery, fruits, oils and fats, and rice.

“We are starting to see year-on-year price declines for ampalaya, cabbage, carrots, tomato, white potato, and imported garlic in the National Capital Region. This signifies that supply is starting to stabilize again,” Pernia said.

Meanwhile, non-food inflation slightly increased to 3.3 percent in November from the previous month’s 3.2 percent.

“Over the near term, we still expect risks coming from both domestic and external fronts,” Pernia said.

On the external front, he said higher international crude oil prices is anticipated following oil production cuts from OPEC until end 2018.

On the domestic front, higher electricity rates and increasing coal and domestic fuel prices will also continue to exert pressures on headline inflation in the near term.

“Overall, however, the inflation outlook for full year 2017 remains supportive of the current economic growth momentum of the country,” Pernia said.

ING Bank’s senior economist Joey Cuyegkeng, in the meantime, said with inflation slowing to 3.3 percent in November which was lower than their own forecast of 3.5 percent, they now see the rate possibly climbing back up again next month.

“Seasonal demand would likely push inflation mildly higher to 3.4 percent to 3.5 percent in December,” said Cuyegkeng. (CSL, LCC)