Ready for another round of high prices as inflation will likely heat up in the month of November which is beyond the projection of the Bangko Sentral ng Pilipinas’ (BSP). This means, costlier food items and higher electricity rates digging deeper in the already exhausted pocket mostly of ordinary working people.
A BusinessWorld poll of 15 analysts last week yielded a median estimate of 7.8% for the consumer price index (CPI) in November, faster than the 3.7% print a year earlier and the 7.7% print in October. If the projection hit its target, November would mark the eight straight months that inflation has breached the BSP’s 2-4% annual target range, and the fastest in 14 years or since the 9.1% print in November 2008. The headline inflation figure will also match the 7.8% midpoint of the BSP’s 7.4-8.2% forecast for the month.
But the Philippine Statistics Authority (PSA) will release inflation data on December 6.
The agriculture sector bore the brunt of several weather disturbances this year. Severe Tropical Storm Paeng which caused over P6.4 billion in agricultural damage. This prompted the Marcos gov’t to declare of a six-month “state of calamity” in Calabarzon, Bicol, Western Visayas and the Bangsamoro Autonomous Region in Muslim Mindanao.
According to Sun Life Investment Management and Trust Corp. economist Patrick M. Ella “For November, our inflation view is 7.8% as we still see elevated food price levels owing to the food supply tightness stemming from the weather disturbances in October and early November,”
Standard Chartered Bank economist Jonathan Koh said that utilities inflation likely went up in November after Manila Electric Co. (Meralco) raised electricity rates.
Meralco raised the overall rate for a typical household by P0.0844 to P9.8628 per kilowatt-hour (kWh) last November.
Security Bank Corp. Chief Economist Robert Dan J. Roces said in an e-mail, “Offsetting these upward pressures are the reduction in petroleum and pork prices, the peso appreciation, and base effects,”
In November alone, oil price adjustments stood at a net decrease of P7.5 a liter for diesel and P4 a liter for kerosene. Meanwhile, gasoline prices had a net increase of P0.8 per liter for the month.
But according to China Banking Corp. Chief Economist Domini S. Velasquez, the core inflation is still on an uptrend, and may peak in the first quarter of 2023. “Our latest estimate shows core inflation might have jumped to 6.1% in November from 5.9% in October. This means that secondary round effects continue to drive higher prices overall,” she added.
Analysts says that the headline inflation will likely peak in December before slowing down next year.
Velasquez said that prices of holiday goods “are at risk of further peaking” “We hope the government can monitor and prevent unnecessary price increases this December,” she added.
She also said that inflation may settle within her forecast range of 7.7-7.9% in December before easing in 2023.
The Department of Trade and Industry (DTI) in November said that prices of many food products which are considered as Christmas staples by Filipinos have increased by 1% to over 10% ahead of the holiday season. These products include ham, spaghetti noodles and sauce, quezo de bola and fruit cocktail.
Meanwhile, BSP Governor Felipe M. Medalla in an interview with Bloomberg TV said that the Monetary Board is likely to be split whether the policy rate would be raised by 25 or 50 bps.
“Certainly, we will not do zero and I cannot speak for the rest of the board. But I think the board members will probably be split between whether doing 25 or 50,” he said.
Jerome H. Powell US Federal Reserve Chair signaled it was time to slow the pace of coming rate increases. The Fed is now widely expected to increase rates by 50 bps at its Dec. 13-14 meetings, adding to the cumulative 375 bps it has delivered since March to tame inflation.
De La Salle University economist Mitzie Irene P. Conchada said that “With the holiday season, prices of seasonal products are seen to increase but overall inflation is seen to slow down towards the end of the year with the tighter monetary policy controls set by the BSP,”
The BSP has raised its benchmark interest rate by a total of 300 bps to 5% since May to curb inflation.
“Looking ahead, we expect inflation to decelerate amid dissipation of supply-side shocks and non-monetary measures to contain price increases,” Mr. Koh said.