Inflation slightly below forecasts in Sept, price spikes seen easing


Posted at Oct 05 2018 09:14 AM | Updated as of Oct 05 2018 11:29 AM

Inflation slightly below forecasts in Sept, price spikes seen easing 1
A woman scans the selection of canned goods at a grocery store in Makati City, Metro Manila. Eloisa Lopez, Reuters/File

MANILA -- Consumer prices rose 6.7 percent in September, slightly below forecasts, the Philippine Statistics Authority said Friday, as government economic managers and analysts pointed to signs that inflation was easing.

Inflation in September compared to the 6.8-percent forecast of economists in a Reuters poll and the 6.3 to 7.1 percent prediction of the Bangko Sentral ng Pilipinas' think tank.

The rise in consumer prices accelerated for the ninth straight month, from 6.4 percent in August. At 6.7 percent, September inflation was the fastest since February 2009.

In the National Capital Region, inflation slowed to 6.3 percent from 7 percent in August. Non-food inflation was at 4 percent from 4.1 percent during the same comparable period.

"These clear signs of easing boost our confidence that inflation will taper off by year-end and go back to our target range by early next year," President Rodrigo Duterte's economic team said in a joint statement.

Inflation slightly below forecasts in Sept, price spikes seen easing 2
ABS-CBN Data Analytics
Inflation slightly below forecasts in Sept, price spikes seen easing 3
ABS-CBN Data Analytics

The slower than expected inflation "eases the concern a little bit," especially since it did not breach 7 percent, BPI lead economist Jun Neri told ANC's Market Edge.

"But there continues to be concern about are we not still hitting the peak as far as the headline number is concerned. This will probably continue to cause some pessimism that interest rate hikes are not about to end just yet," he said.

Neri said the market would closely watch world oil prices, which are expected to rise further in October.

"Which means to us, we haven't seen the peak just yet. Today's number at least tells us that we are somehow getting closer to that peak," he said.

Inflation in September "supports our assessment that inflation is close to or has peaked for the year and is expected to taper off going into the year end," said ING Bank economist Nicholas Mapa. 

An additional 750,000 metric tons of rice are expected to arrive in the coming weeks and policy measures to address inflation will take effect ahead of the Christmas season, he said.

The BSP hiked its benchmark borrowing rate for 4 straight policy meetings this year, bringing it to 4.5 percent from 3 percent. It also raised its inflation outlook this year to 5.2 percent and 2019 to 4.3 percent.

Neri said he expected at least a 25-basis point increase in the overnight borrowing rate during the BSP's penultimate meeting for the year in November.

On the eve of the release of September inflation data, Finance Secretary Carlos Dominguez said the government was addressing rising consumer prices with the President's recent directives.

Prices of some basic goods will not be increased for at least 3 months, after the government appealed to manufacturers, the Department of Trade and Industry said in September.​

At its policy meeting last month, the central bank said inflation would peak in September and slowly ease back to within its target next year, due to a combination of monetary and non-monetary measures including removing non-tariff barriers to certain agricultural imports.

Some economists believe the central bank would deliver at least one more rate hike before the end of the year. 

-- with a report from Reuters