Inflation seen to settle at 3.9% in Nov.

Published December 3, 2021, 3:00 PM

by Lee C. Chipongian

The inflation rate for the month of November could settle at 3.9 percent or within the two-four percent government target, said Security Bank Corp. (SBC).

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The SBC projection is higher than Bangko Sentral ng Pilipinas’ (BSP) forecast of 3.7 percent for November. The Philippine Statistics Authority will release the latest inflation rate on Dec. 7.

“(The) November 2021 headline inflation rate is estimated to have slowed to +3.9 percent (3.9 percent) year-on-year from October’s 4.6 percent,” said SBC economist Robert Dan Roces in a commentary on Friday, Dec. 3.

“Our forecast range is 3.7 percent to 4.1 percent and the estimated month-on-month change is +0.4 percent,” said Roces.

Roces added that while the year-on-year rate was “offset by favorable base effects” the 0.4 percent month-on-month increase was due to a “heavily-weighed food basket” where they project a 10 basis points (bps) increase as the “Ber” holiday season has already started.

Roces noted that utilities may have increased by 30 bps because of higher residential electricity rates “due to issues with Malampaya plus higher demand” while restaurants and services baskets are estimated to have gone up by 150 bps with “demand-pull on the back of looser curbs.”

“For the months ahead, primary upside risks include global crude and other commodity price movements, while the downside is posed by the omicron variant. Food remains elevated and susceptible to any supply snags,” said Roces.

The consumer price index breached four percent in January this year and has stayed above the two-four target for the last 10 months.

BSP Governor Benjamin E. Diokno said last Nov. 29 that the November inflation could hit a low of 3.3 percent or a high of 4.1 percent, with a point inflation forecast of 3.7 percent.

If the BSP projection is on point, it will be the first time since December 2020 that inflation will be below four percent and within the two-four percent target for 2021.

The BSP said the higher electricity and LPG prices along with the uptick in the prices of meat, fish, fruits and vegetables are the primary sources of inflationary pressures for the month of November. However, these could be offset in part by rollbacks in domestic petroleum prices and the appreciation of the peso.

The inflation rate in October declined to 4.6 percent from September’s 4.8 percent and from August’s 4.9 percent. Stable prices of meat and fish eased inflation pressures in October.

The BSP forecasts an end-2021 inflation average of 4.3 percent. As of end-October, the average was at 4.5 percent.

 
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