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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assessed the latest inflation figures in the Philippines.

Key Quotes

“Headline inflation surprisingly accelerated to 2.5% y/y in Oct (from +2.3% y/y in Sep), versus our estimate … of a steady rate at 2.3% y/y. This came as the rise in prices of selected food items (i.e. meat and fish), LPG, transport services, personal care, and housing rental fully outpaced the decline in costs of gasoline, diesel, rice, corn, vegetables, and utilities.”

“Despite an uptick in Oct inflation, consumer price pressures are expected to stay at the lower bound of the central bank’s target range of 2.0%-4.0% in 4Q20. This will bring the 2020 full-year inflation to an average of 2.5% (BSP forecast: 2.3%). Going into 2021, the balance of risks to the inflation outlook remains slanted to the downside. We project it to average 2.5% for next year (BSP forecast: 2.8%), going by a gradual economic recovery, stable commodity prices, and year ago high base comparison.”