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

Key Quotes

“Headline inflation spiked up to a 20-month high of 3.3% y/y in Nov (from +2.5% y/y in Oct), markedly overshooting our estimate (+2.5%), Bloomberg consensus (+2.6%), and BSP’s monthly forecast range of 2.4%-3.2%. The adverse impact of bad weather, Asian Swine Flu, and ongoing pandemic-induced restriction on movement were main factors lifting headline inflation last month, as evidenced by the sharp gain in prices of food, alcoholic beverages, and tobacco.”

Despite a sharp rebound in Nov consumer prices that led to a marginal upward revision in our 2020 full-year inflation estimate to 2.6% (from 2.5% previously; BSP forecast: 2.4%), the nearterm outlook for inflation is expected to remain benign and to stay at the lower end of the BSP’s target range with risks tilting towards the downside. High unemployment and ongoing practising of standard operating procedures may continue to cap any substantial rise in domestic demand into at least early next year. We reiterate our 2021 full-year inflation projection of 2.5% (BSP forecast: 2.7%) amid year-ago high base comparison.”