By Katherine K. chan
core inflation outlook Higher utility costs led to lower prices of food items, especially rice, in November During the month, analysts said.
A businessworld The survey of 15 analysts yielded an average estimate of 1.6% for November inflation, well within the Bangko Sentral ng Pilipinas (BSP)'s 1.1-1.9% month-ahead estimate.
If realized, last month's consumer price index (CPI) would have slowed from a 1.7% clip in October and 2.5% recorded a year earlier.
It could also be the slowest clip in three months or since the 1.5% seen in August, and it could be the ninth consecutive month that inflation has fallen below the central bank's 2-4% target.
1.6% November inflation print will bring 11-month average up Inflation 1.7%, equal to centsTraal Bank's forecast for the year.
The Philippine Statistics Authority is about to release November inflation data on 5 December.
Azril Rosli, an economist at Maybank Investment Bank, said inflation was likely to ease in November as food price pressures eased.
“The easing of food price pressures, particularly in key commodities such as rice and vegetables, was driven by improving supply conditions during the harvest season,” Mr. Rosli said in an e-mail.
Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said the latest food price data showed food inflation was likely to remain slow, but not “below zero” as previously expected.
Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said disinflationary pressures remained effective in November, particularly rice deflation.
“The sustained decline in rice prices – a high-weight commodity in the CPI basket – has had a powerful impact on overall inflation,” he said in an e-mail. “This trend is well documented and continues to be a major driver of Reading less headlines.
The latest data from the Department of Agriculture showed that the average price of local regular milled rice fell 16.45% to P37.28 per kilo in the Nov. 10-15 period from P44.62 per kilo a year earlier. Well-milled rice also declined 11.68% year-on-year to P42.33 per kilo from P47.93, while special rice declined 5.12% to P56.92 per kilo in 2024 from P59.99.
The ban on rice imports, which was originally scheduled to expire on November 2, was extended until the end of 2025.
Mr Asuncion said price changes in other agricultural products were “mixed”, noting that limited new data on vegetables and perishables could bring “some uncertainty”.
ANZ Research chief economist for Greater China Raymond Yeung and economist Vicky Xiao Zhou said a “modest increase” in electricity tariffs could push up utility inflation.
Manila Electric Co. raised overall electricity rates by P0.1520 per kilowatt-hour (kWh) for the second consecutive month in November, to P13.4702 per kWh.
“Relatively stable global crude oil prices as well as the peso’s resilience against the US dollar helped keep transportation and utility costs under control,” Mr Rosalie said. “Furthermore, the contraction in domestic demand and the transmission effects of the BSP's previous monetary policy adjustment continued to exert disinflationary pressure.”
Security Bank Chief Economist Angelo B. Taningco said peso depreciation could also have a negative impactTribute to November's inflation.
The peso strengthened against the greenback at P58.645 per dollar at the end of November, up 20.5 centavos from P58.85 at the end of October. It recovered slightly after finishing at the P59 level several times last month, even hitting a new record low of P59.17 on November 12.
more room to cut
Analysts expect full-year inflation to fall below the BSP's 2-4% target, leaving room for a more liberal policy Stance for the central bank.
“We estimate that inflation will remain on average below the BSP's target range this year. It is expected to rise within the target range next year, largely due to base effects,” Chinabank Research said.
Mr Chanko said the BSP's 1.7% forecast for this year is “still on track, although the risks are tilted a bit to the downside.”
Mr Asuncion said he expected inflation to average 1.6% this year due to persistent rice deflation, pressure from low energy costs and low food prices.
“Demand side pressures remain mild, and upside risks – such as supply shocks or geopolitical tensions – are unlikely to change the trajectory into year end,” he said.
Oikonomia Advisory & Research, Inc. Economist Reniel Matt M. Ares said he expects the BSP to cut by 25 bps at its December 11 meeting.
“If we add slow economic growth to the equation, it is almost guaranteed that the BSP will remain on its monetary policy easing path,” he said in a Viber message.
In the third quarter, the Philippine economy grew 4% year-on-year, slowing from 5.5% in the second quarter and 5.2% a year earlier. This resulted in economic growth falling below the government's full-year target of 5.5-6.5% by September.
“As a result, inflation should remain low, and we expect the Bangko Sentral ng Pilipinas to conduct two additional 25-bp rate cuts during the current easing cycle,” said Mr. Yeung and Ms. Zhou of ANZ Research.
The central bank has cut key borrowing costs by 175 bps since starting its easing cycle in August 2024, taking the policy rate to a three-year low of 4.75%.
Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said headline CPI is likely to remain below the BSP target until March next year, before rising by 2% to 3% from April to December due to base effects.
The BSP estimates that inflation will return to the target band of 3.1% next year, before slowing to 2.8% in 2027.
