Inflation rate in November 2019 picked up to 1.3 percent from 0.8 percent in October, on moderate price increase of electricity, fuel and selected food items following the outbreak of the African Swine Fever in several provinces, data from the Philippine Statistics Authority show.
The PSA, however, said the November print was still slower compared to the 6-percent inflation registered in November 2018. Inflation averaged 2.5 percent in the first 11 months, within the government’s 2019 target range of 2 percent to 4 percent.
The Bangko Sentral ng Pilipinas said the November inflation was also within its forecast range of 0.9 percent to 1.7 percent for the month.
“These were tempered by the continued decline in rice prices along with the appreciation of the peso. The latest inflation outturn is consistent with the BSP’s prevailing assessment that inflation has bottomed out in October and is expected to gradually approach the midpoint of the target range in 2020 and 2021,” the BSP said in a statement.
“The risks to the inflation outlook are on the upside for 2020, but are tilted to the downside in 2021. The volatility in global oil prices and the potential impact of the African Swine Fever outbreak are the main upside risks to inflation,” the BSP said.
The BSP said the impact of global trade and policy uncertainty aand geopolitical tensions continued to be the main downside risks to inflation.
“The BSP will consider all the latest economic developments here and abroad in the Monetary Board’s policy meeting on Dec. 12, 2019 to ensure that the monetary policy stance remains consistent with the BSP’s price stability objective while being supportive of economic growth,” it said.
ING Bank Manila senior economist Nicholas Mapa said food inflation for the month was flat on the back of improved supply conditions and ample rice supply because of a newly-passed law that removed quotas on rice imports.
“Relatively stable global crude oil prices also helped both utility [1.2 percent] and transport costs in deflation [-2.4 percent] also helped keep headline inflation stay below the lower-end of the Bangko Sentral ng Pilipinas’ 2-4 percent inflation target,” Mapa said.
He said that with the base effects from last year’s inflation spike fading quickly, the acceleration in inflation would continue into 2020 and settle at around 3 percent throughout the most part of next year.
“For as long as supply conditions remain favorable, we can expect inflation to remain in-check. However, we are unlikely to visit the sub-2 percent level for at least the next 12 months,” Mapa said.
Mapa said given the higher-than-expected inflation print, BSP Governor Benjamin Diokno might refrain from slashing policy rates during the Dec. 12 meeting of the Monetary Board.
The National Economic and Development Authority said the government should ensure sufficient food supply and manage upside risks such as the impact of typhoon Tisoy and the ASF to handle inflation.
“We expect the 2019 full-year inflation to settle within the government’s target. However, there remains upside risks to inflation such as the impact of typhoon Tisoy and ASF. It is also crucial to ensure sufficient supply of key food items in managing the country’s overall inflation, especially with the anticipated surge in demand this holiday season,” NEDA Undersecretary for Regional Development and officer-in-charge Adoracion Navarro said.
She said the recovery and rehabilitation efforts in the disaster-stricken areas should be prioritized.