Philippine headline inflation continued to slowdown in October, partially because of base effects. On a year-on-year basis, the consumer price inflation eased to 0.8 percent from the prior month’s 0.9 percent. Core inflation slowed to 2.6 percent on a year-on-year basis from 2.7 percent previously. Sequentially, it came in at 0.25 percent.
Sequentially, the headline inflation came in at 0.2 percent, the same as in the prior month. Food prices contributed positively in the month, in spite of rice and corn prices dropping again. In the meantime, ‘housing and utilities’ prices rose 0.2 percent due to higher electricity costs.
On a year-on-year basis, food and transport prices continue to be a major drag on the headline inflation. Annual changes for almost all other components have been more stable. Inflation has likely reached a bottom.
“Inflation has likely hit a bottom. With the previous year’s base effect beginning to fade, we should see inflation gradually rise from here. Consistent with this, there is some evidence that the number of items with prices rising above 4 percent y/y as well as their weights in the basket is now falling at a slower pace. Even so, the rise is unlikely to threaten the BSP’s monetary policy stance. We believe that monetary policy can continue to support growth over the next few meetings”, stated ANZ in a research report.
