After five consecutive months of slowdown, inflation in November accelerated to1.3 percent due to the uptrend in prices of tobacco, alcoholic beverages and utilities.
Inflation in October 2019 was recorded at 0.8 percent and in November 2018, 6.0 percent.
The Philippine Statistics Authority (PSA) said inflation surged also due to higher price increases in the indices of housing, water, electricity, gas, and other fuels; furnishing, household equipment and routine maintenance of the house; health; and, communication.
PSA, however, noted slower annual gains were observed in the indices of clothing and footwear and restaurant and miscellaneous goods and services.
The index of the heavily-weighted food and non-alcoholic beverages registered an annual growth of zero percent in November 2019, from 0.9 percent annual drop in October 2019.
Excluding selected food and energy items, PSA said core inflation remained at its previous month’s annual rate of 2.6 percent.
November’s uptick, however, was expected by both the country’s economic managers and analysts.
Benjamin Diokno, Bangko Sentral ng Pilipinas Governor, said inflation was “within the BSP’s expected range of 0.9 – 1.7 percent for the month” and
The resulting year-to-date average inflation rate of 2.5 percent remained well within the government’s target range of between 2 and 4 percent.
“The latest inflation outturn remains 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 will carefully consider all the latest developments here and abroad at its upcoming monetary policy meeting next week to ensure that the monetary policy stance remains consistent with the BSP’s price stability objective,” Diokno said in a statement.
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 African Swine Fever (ASF) to handle inflation.
“We expect the 2019 full-year inflation to settle within the government’s target,” said NEDA Undersecretary for Regional Development and Officer-in-Charge (OIC) Adoracion M. Navarro.
Nicholas Antonio Mapa, Senior Economist at ING Bank Manila, said “inflation to trend higher from hereon.”
“With base effects from last year’s inflation spike fading quickly, we expect the acceleration in inflation to continue going into 2020 and settle at around 3 percent throughout the most part of next year.” Mapa said.
“Given the higher than expected inflation print, we expect BSP Governor Diokno to refrain from slashing policy rates at the next policy meeting. Diokno had indicated that he remains data-dependent with inflation being his primary consideration for policy rate adjustments. Given his dovish leaning however, Diokno could resume his rate cut cycle as early as 1Q 2020,” Mapa added.
The Monetary Board last month decided to maintain the key rates of the Bangko Sentral ng Pilipinas.
The BSP’s overnight reverse repurchase (RRP) facility remains at 4 percent. The interest rates on the overnight deposit and lending facilities were accordingly held unchanged at 3.5 percent and 4.5 percent, respectively.
PSA said inflation in the National Capital Region (NCR) picked up further by 1.5 percent in November 2019. Inflation in areas outside NCR, likewise, went up by 1.2 percent.
Six regions in areas outside NCR had higher positive annual rates during the month. The highest inflation among the regions in areas outside NCR was still noted in Region III (Central Luzon) at 2.2 percent, while the lowest remained in Region IX (Zamboanga Peninsula) at -0.5 percent.