UOB Group's Senior Economist Julia Goh and Economist Loke Siew Ting assessed the latest inflation figures in Philippines.
Key Quotes
"Feature inflation bounced to 1.3% y/y in Nov (from 0.8% y/y in Oct), suggesting that consumer value inflation may have bottomed out in Oct. The perusing coordinated our estimate however came a touch higher than Bloomberg consensus (1.2%). It was predominantly determined by upward adjustment in power rates and real rental for housing, as well as more significant expenses of some staple nourishment (for example meat, fish, fruits and vegetables), mixed beverages and tobacco in the midst of dissipating base effects."
"We keep up our entire year inflation forecasts at 2.5% for 2019 (BSP's forecast: 2.4%) and 3.0% for 2020 (BSP's forecast: 2.9%). Primary drivers of a higher inflation rate one year from now remember an arranged climb for excise duties for tobacco and mixed beverages, potential adverse effect from the progressing African Swine Flu (ASF) pandemic crisis, as well as the absence of ideal base effects."
"Given that Nov's inflation came in accordance with our estimate and hit the mid-purpose of Bangko ng Sentral Pilipinas' (BSP) forecast scope of 0.9%-1.7%, we accept the national bank will keep on staying put at its last Monetary Policy Committee meeting of the year on 12 Dec. All things considered, we expect BSP to resume its rate cuts one year from now as the moderate inflation viewpoint offers space for the national bank to ease further so as to sustain domestic development force. We have penciled in a total 50bps cut in medium-term reverse repurchase rate to 3.50% by mid-2020."
