Chief DOF economist expects higher inflation in November

MANILA, Philippines - Inflation could have accelerated this month after bottoming out in September and October as utility and food prices rose faster, the chief economist of the Department of Finance (DOF) said.

Consumer prices likely rose 0.8 percent in November, faster than the 0.4-percent pace recorded in the previous two months, Finance Undersecretary Gil Beltran said in an economic bulletin issued Tuesday.

 “The higher rate of increase in the general prices may be traced to a slower deceleration in the housing and utilities group and modest rise in food prices,” Beltran said.

Inflation, as measured by the consumer price index (CPI), has been slowing down for this year so far, putting the year-to-date result at 1.4 percent, below the two- to four-percent official target for the year.

Lower inflation bodes well for economic growth as it increases the purchasing power of consumers. The Bangko Sentral ng Pilipinas has also refrained from raising interest rates, keeping bank funding cheap.

According to the CPI basket, food, housing and utility prices account for the two highest portions of total goods and services used to measure prices of basic commodities in the country.

Food prices corner 39 percent of the basket, while housing, water and electricity bills account for 22.46 percent.

Beltran said food prices may have risen 1.1 percent this month, up from 0.8 percent in October, while utility rates may have decreased an average of 1.3 percent, slower than 2.2-percent dip last month.

For November, Manila Electric Co., the largest power distributor in the country, raised power rates by P0.13 per kilowatt hour, ending six straight months of reduction.

Oil firms also implemented “varying levels of increases” on petroleum products as of Nov. 10, according to the Department of Energy website. Gasoline and diesel prices rose up to P0.35 and P0.85 per liter, respectively.

Still, Beltran said “other measures of inflation continue to be at their lowest levels.”

Among nine other sub-indices, three were forecast to post stable price gains from previous months namely health, education and restaurant and miscellaneous services indicators.

Prices of alcohol and tobacco could have risen at a slower pace of 3.5 percent, while those under the communication sub-index could have dipped 0.1 percent, Beltran predicted.

Lower prices “indicate continuing rise in competitiveness” of the country, Beltran said.