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Supermarket employees arrange products inside a grocery, Oct. 19, 2024. \u2014 PHILIPPINE STAR\/MIGUEL DE GUZMAN<\/p>\n Supermarket employees arrange products inside a grocery, Oct. 19, 2024. \u2014 PHILIPPINE STAR\/MIGUEL DE GUZMAN<\/p>\n
MAYBANK INVESTMENT BANK and United Kingdom-based think tank Pantheon Macroeconomics have raised their Philippine inflation forecasts until next year amid sticky food and oil prices.\u00a0<\/p>\n
In a Sept. 4 report, Maybank said it now sees inflation accelerating to 5.5% this year from its prior 5.3% estimate, and to 5.1% next year from 4.9% previously, driven largely by food inflation risks in the second half of 2026.\u00a0 \u00a0<\/p>\n
\u201cThe persistence of elevated inflation across transport, housing, health and services, alongside rising risks from El Ni\u00f1o-related food supply disruptions and peso depreciation, suggests that disinflation is likely to remain gradual,\u201d Maybank analysts said.\u00a0<\/p>\n
Separately, Pantheon Macroeconomics upwardly revised its inflation estimates to 5.5% for this year from 5.3% previously, and 3.2% for 2027 from 2.7% previously.<\/p>\n
\u201cThis is to take into account the likely stickiness in global oil prices until the end of this year, owing to the low-level, but recurring, skirmishes between the US and Iran affecting flows from the Middle East,\u201d Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco and Asia Economist Meekita Gupta said in report on Monday.\u00a0<\/p>\n
\u201cMoreover, albeit less importantly, the continued slide in the headline rate in August, to 6.1% from 6.2%, was not as notable as we expected, by 0.1 ppt (percentage point),\u201d they added.<\/p>\n
In August, inflation eased to a five-month low of 6.1% from 6.2% in July, as lower food and utility prices offset elevated transport costs.<\/p>\n
August marked the sixth month in a row that the headline print was above the central bank\u2019s 3% target, bringing the year-to-date average inflation to 5.2%.<\/p>\n
However, Mr. Chanco and Ms. Gupta noted core inflation likely peaked earlier this year as August data showed a second straight month of softening.\u00a0<\/p>\n
\u201cCrucially, we\u2019re now seeing more signs that core inflation has peaked. The official underlying pace fell further last month, to 4.1% from 4.2%,\u201d the Pantheon economists said.<\/p>\n
\u201cAdmittedly, our estimate for \u2018true\u2019 core \u2014 which has been stuck at around 4.7% \u2014 has yet to show a similar turnaround, but previously hot trends at the margin here have\u2026,\u201d they added.<\/p>\n
This, according to Mr. Chanco and Ms. Gupta, strengthens the case for the Bangko Sentral ng Pilipinas (BSP) to end their tightening cycle.<\/p>\n
ONE MORE HIKE
However, Maybank and Nomura Global Markets Research still see room for a final 25-basis-point (bp) policy rate increase before yearend.<\/p>\n
\u201cReflecting the persistence of inflationary pressures and the potential for El Ni\u00f1o to generate second-round effects, we maintain our BSP policy rate forecast at 5.25% by end-2026, as a preemptive measure to anchor inflation expectations and contain the broader pass-through from food, transport and other supply-side pressures,\u201d Maybank said.<\/p>\n
Last month, the BSP said inflation will likely peak in the fourth quarter this year as potential supply disruptions from the looming Super El Ni\u00f1o push food prices up. It likewise flagged risks from volatile oil prices and the now-suspended wage hike.\u00a0 \u00a0<\/p>\n
The state weather bureau has warned that the country may face a \u201cstrong\u201d El Ni\u00f1o season from September to November, which could intensify into a \u201cvery strong\u201d one between October and January next year.<\/p>\n
On the other hand, Nomura\u2019s policy forecast came as it noted that its projections of headline inflation at 5.1% and core inflation at 3.9% this year have yet to take into account the expected impact of the severe El Ni\u00f1o event.<\/p>\n
\u201cIn terms of monetary policy, we maintain our view that BSP will hike by another 25 bps to 5.25% at its next monetary board meeting in October but we continue to flag some risks it could deliver more thereafter,\u201d Nomura research analysts Euben Paracuelles and Nabila Amani said in a report dated Sept. 4.<\/p>\n
For Mr. Paracuelles and Ms. Amani, monetary policy may remain restrictive as inflation may continue to exceed the BSP\u2019s 4% ceiling in the near term.<\/p>\n
\u201cAs we have argued, a further monetary tightening remains warranted based on our forecast for headline inflation to stay above BSP\u2019s 2-4% target range in coming months,\u201d they said.<\/p>\n
\u201cImportantly, we maintain our view that core inflation will remain on an upward trajectory throughout the rest of the year, which BSP would likely assess as a sign of second-round effects, requiring additional policy response,\u201d the Nomura analysts added.<\/p>\n
In August, the Monetary Board raised its benchmark interest rate for a third straight meeting by 25 bps to an over one-year high of 5%, bringing its cumulative hikes to 75 bps since it first tightened in April.<\/p>\n
BSP Governor Eli M. Remolona, Jr. has said the latest rate hike was meant to preemptively contain inflation risks from the looming severe El Ni\u00f1o, potential wage hike, and volatile global oil prices.<\/p>\n
He has said he hopes they won\u2019t have to hike more, but left the door open to tighten further as needed to bring inflation closer to their 3% target.<\/p>\n
The BSP\u2019s latest projections show headline inflation could breach its target for three straight years at 6.1% this year, 5.4% in 2027, and 3.3% in 2028.<\/p>\n
The Monetary Board\u2019s last two rate-setting meetings this year are scheduled for Oct. 22 and Dec. 17. \u2014 Katherine K. Chan<\/p>\n","protected":false},"excerpt":{"rendered":"Supermarket employees arrange products inside a grocery, Oct. 19, 2024. \u2014 PHILIPPINE STAR\/MIGUEL DE GUZMAN MAYBANK INVESTMENT BANK…\n","protected":false},"author":2,"featured_media":608890,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46,246045],"class_list":["post-608889","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel","tag-katherine-k-chan"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/608889","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=608889"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/608889\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/608890"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=608889"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=608889"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=608889"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}