Nicholas Mapa, senior economist at ING, suggests that after falling to 0.8% in October, they are expecting Philippine inflation to bounce to 1.3% as base effects from last year’s spike fade quickly out.
Key Quotes
“We expect inflation to revert back to the midpoint of the BSP’s 2-4% inflation target next year and to average 3.2% in 2020. Inflation for the most heavily weighted sub-group (food and beverages are 38% of the basket) will also stay subdued due to imports and better weather conditions. Meanwhile, with global growth forecast to sputter next year, we expect subdued commodity prices to limit both energy and transport costs for the Philippines.”
“Bangko Sentral ng Pilipinas (BSP) Governor Diokno kept the door open for a rate cut at the 12 December meeting, indicating that he will take his cue from inflation data to decide if further action is appropriate. Given that we predict inflation to rebound to 1.3% from 0.8%, BSP will likely pause at its last meeting of the year.”
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