DOMESTIC inflationary pressures — which made local consumer prices accelerate to their fastest levels in almost a decade in recent months — seem to be abating and may, in turn, make the central bank pause from its rate hike streak when its policy makers convene next month.
In a research note to clients, ING Bank senior economist Nicholas Mapa said that recent declines in food prices together with lower utility rates and pump prices bode well for the Philippines’ inflation outlook, and predicted that the rise in the October consumer price index would be capped at only 6.5 percent.
“Government officials have sounded off recently on the increasing likelihood that domestic inflation had indeed peaked in [the third quarter], pointing to recently implemented non-monetary and monetary measures that have begun to take root,” he said.
The central bank has, so far, raised local interest rates by a total of 150 basis points in four successive adjustments since May, after initially predicting that price hikes would abate by the fourth quarter of 2018 or early 2019, at the latest, without need for any policy intervention.
“The fruits of such measures are now being reflected on the ground, validating our earlier expectation that inflation had peaked in September, affording [the Bangko Sentral ng Pilipinas] some leeway to pause at its November meeting,” Mapa added.
His view jibes with that of government economic managers who have pointed out that the September inflation rate of 6.7 percent, though marking a nine-year high, saw a lower monthly increase from August’s 6.4 percent.
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