Philippines: Inflation decelerates in September – UOB

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

Key Takeaways

“Headline inflation eased slightly to 4.8% y/y in Sep after jumping to a 2½-year high of 4.9% y/y in Aug. The reading defied our and market expectations of a rise to 5.2% and 5.1% respectively. Slower gains in food prices and transport services costs were main factors pulling down headline inflation in Sep, and offsetting a persistent upward adjustment in electricity rates amid a weaker Peso (PHP) and an extension of COVID-19 pandemic curbs in the capital region, Metro Manila.”

“Despite a softer inflation outturn in Sep, the prolonged recovery from African Swine Fever (ASF) outbreak, persistent global supply chain bottlenecks, bad weather, rising commodity prices, and expected currency weakness continue to pose upside risks to the nation’s near-term inflation outlook. This infers that headline inflation will remain elevated over the next two months before retracing back to BSP’s 2%-4% target range by Dec and into 2022. We keep our full-year inflation projections at 4.5% for 2021 (BSP’s forecast: 4.4%) and 3.5% for 2022 (BSP’s forecast: 3.3%).”