Inflation steadies at year-end

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Chidu Narayanan

An economist on Tuesday revealed that inflation in the country has likely slowed to 6.4 percent in November due to lower food and fuel prices.

In a televised interview, Standard Chartered Asia economist Chidu Narayanan noted on the eve of the release of an official data that the Consumer Price Index will also likely ease back to the government’s 2 to 4 percent target by the end of 2019.

“All factors that were pushing inflation up this year have likely abated leading to lower inflation,” Narayanan said.

Inflation steadied at 6.7 percent in September and October after holding at near 10-year highs and government’s economic managers predict a tapering off towards the end of 2018.

The Bangko Sentral ng Pilipinas’ (BSP) Department of Economic Research expects inflation to settle between the 5.8 to 6.6 percent range in November and Narayanan said the BSP could hike interest rates one more time this year despite easing inflation.

The BSP upped the benchmark borrowing rate by a cumulative 1.75 percentage points this year in the face of rising prices.

On Monday, the latest Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) showed that manufacturing grew for the fourth straight month in November as factories ramped up domestic production even as export orders fell.

The seasonally adjusted PMI climbed to an 11-month high of 54.2 last month from 54 in October, global research firm IHS Markit said in a report. A PMI score of above 50 indicates an overall increase in manufacturing activity.

In a separate report on the Association of Southeast Asian Nations region, IHS Markit noted the Philippines’ PMI reading in November indicated a “solid increase” in domestic manufacturing activities compared to October, ranking only behind Vietnam.

“Output growth remained sharp in the Philippines’ manufacturing sector during November, building confidence for stronger GDP (gross domestic product) growth in the fourth quarter. The headline Nikkei PMI strengthened even further from October, while production levels rose at the fastest rate in almost two years,” IHS Markit economist David Owen said in a statement.

“Filipino manufacturers were boosted by a sharp increase in new orders in November. Marginally quicker than in October, the latest rise in demand was the strongest seen in 12 months,” IHS Markit said.

Finance Secretary Carlos Dominguez III also said Wednesday inflation would “taper off” towards the end of the year after holding at 6.7 percent in September and October.

“The government has responded decisively,” Dominguez said. “We expect inflation to taper off in the closing months of the year.”

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