By Luisa Maria Jacinta C. Jocson, A reporter
HEADLINE INFLATION is possible accelerated in October amid higher prices for essential items such as food and fuel, analysts said.
A BusinessWorld vote 11 analysts gave an average estimate of 2.4% for the consumer price index (CPI) in October.
The Bangko Sentral ng Pilipinas offered 2-2.8% in betweenfmonthly forecast.
“High prices of food such as vegetables, fruits and so on fand the increase in domestic fuel prices and the depreciation of the peso are the main sources of increased price pressure for the month,” the BSP said in a statement.
If possible, October inflation would have increased from 1.9% printed in September. However, it will still be slower than the 4.9% in the same month last year.
“Inflation figures for October are estimated at 2.4% year-on-year. Factors that may drive it include high fuel prices, low electricity prices, moderate food prices in betweenflation, and the depreciation of the peso,” said Security Bank Vice President and Head of Research Angelo B. Taningco.
Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. We said that the bad weather conditions probably caused the increase in the prices of food items, especially vegetables and fruits.
Agricultural damage due to Tropical Storm Kristine reached P3.76 billion, said the latest report of the Department of Agriculture.
Chinabank Research noted the possibility of a food seizureflation. “High prices of vegetables fruits, fish, and eggs offset month after month the prices of rice and meat go down.”
“October’s high fuel prices also had an impact as well as the increase in the prices of various food items,” said Ruben Carlo O. Asuncion, economist at Union Bank of the Philippines, Inc..
In October alone, the pump price adjustment stood at P2.80 per liter of gasoline, P4.60 per liter of diesel, and P3.25 per liter of kerosene.
Chief Economist Rizal Commercial Banking Corp. Michael L. Ricafort noted the weak exchange rate of the peso, “which may lead to some increase in the cost of imports and in all countries.frelationship.”
The peso closed at P58.10 per dollar at the end of October, down P2.07 from its P56.030. fat the end of September.
On the other hand, the central bank saidfthe meeting will be ofincluding lower prices for rice and meat, and lower electricity prices.
Manila Electric Co. (Meralco) reduced the total price by P0.3587 per kilowatt-hour (kWh) to P11.4295 kWh in October from P11.7882 kWh last month.
For customers who regularly use 200 kWh, this translates to a reduction of about P72 in their total monthly electricity costs.
Rice prices also fell after the reduction of tariffs rice imup to 15% of ports became operational in July.
The latest data from the Department of Agriculture showed the average price of milled rice ranging from P43 to P54 per kilogram at the end of October, lower than the P47-to-P55 range at the end of September.
Meanwhile, regular milled rice was priced at P40-P50 per kilo from P45-P50 per kilo last month.
HOW TO PROCEED
In the coming months, analysts say infthe band will continue to stabilize within the BSP target band of 2-4%.
“Come infthe increase may remain at 2% levels until the end of 2024, although some prices are expected during the Christmas holidays amid increased demand, but they will eventually ease when you skip the holiday season,” said Mr. Ricafort.
Mr. Neri said in betweenfshould remain “under control” for the next 12 months, barring any panic.
“The biggest risks to this outlook include the possibility of La Niña and the spread of African Swine Fever,” he said.
“It should also be noted that infThe weather is always sensitive to weather conditions and can easily rise. However, stable commodity prices during the Chinese economic downturn may ofend these dangers.”
Expecting the inflation target will allow the BSP to continue its easing cycle, Mr. Ricafort.
“For monetary policy, I think it’s on autopilot and I see very little that could derail the 25-bp cut in December,” said Patrick M. Ella, an economist at Sun Life Investment Management and Trust Corp.
BSP Governor Eli M. Remolona, Jr. previously signed off on a possible 25-bp cut at the Dec. 1 Monetary Board meeting. 19, the last of the year.
The central bank has so far reduced borrowing costs by a total of 50 bps since it began its easing cycle in August.
“Furthermore, the monthly effective inflation figures for this quarter are likely to remain below 3% due to the decline in the price of rice.ffs and base efresults,” said Chinabank Research.
Sarah Tan, an economist at Moody’s Analytics, said that despite the expected pace increase, the inflation target will “reaffirm the BSP’s view that inflation expectations are firmly supported.”
“While this will give the BSP the confidence to deliver another 25-bp rate cut in December, a weaker peso could prompt them to hold back.ff relaxation,” he added.
Insidefwhich are expected to continue to be controlled, mr. Neri said a rate cut in the BSP could be on the table in December. He cited risks that could disrupt the BSP’s rate-cutting cycle, such as the continued weakness of the peso and uncertainty over the US Federal Reserve’s easing approach.
“A stronger-than-expected US jobs report or a Republican sweep in the upcoming US election could strengthen this sentiment, potentially weakening the peso and adding upward pressure on inflation. “The BSP may consider pausing its rate cuts if the Fed does not cut as expected,” said Mr. Neri.
“Recent market volatility highlights the need for discretion when it comes to price cuts. While inflation forecasts allow room for tapering, aggressive action may not be the case wise in the current climate.”
The BSP said it will “continue to take a balanced approach to ensure price stability in line with balanced and sustainable economic growth and employment.”
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