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

Key Quotes

“Headline inflation continued its moderating trend for the second straight month to 2.3% y/y in Sep (from 2.4% y/y in Aug), matching our estimate… The reading was mainly weighed by lower food costs, fuel prices, and electricity rates amid a stronger Peso (PHP) and a continued implementation of general community quarantine (GCQ) across most provinces until end-Oct.”

“The balance of risks to inflation remains tilted to the downside in the near term, going by expectations of a continuing GCQ in the country that will lead to a moderate economic recovery and still-high unemployment rate. This will also be associated with subdued global commodity prices heading into 2021. The year-to-date inflation of 2.5% in the first nine months of 2020 suggests that our 2020 full-year inflation estimate of 2.5% (BSP forecast: 2.3%) remains on track. For 2021, we project price gains to stay steady at 2.5% (BSP forecast: 2.8%).”