By Luz Wendy T. Noble

INFLATION likely slowed further in October as a continued easing of prices of rice and fuel offset any upside pressure from pork substitutes amid the onslaught of African swine fever (ASF), according to a poll of 14 economists conducted late last week.

The analysts also noted that base effects from the nine-year-high 6.7% headline inflation recorded in September and sustained in October last year also pushed inflation lower last month.

At the same time, they expect price pressures to pick up in this year’s remaining two months as base effects subside and consumption picks up ahead of Christmas.

Last week’s poll bared an estimate median of 0.8% for October inflation that, if realized, would mark October as the fifth consecutive month of cooling inflation, the second month that the pace clocked in below one percent, and the slowest clip in nearly three-and-a-half years or since April 2016’s 0.7%.

It is also within the lower half of the 0.5-1.3% October estimate which the Bangko Sentral ng Pilipinas Department of Economic Research gave on Thursday last week.

For the whole of 2019 and 2020, the central bank targets inflation to clock in 2-4%, with a trimmed 2.5% forecast for this year.

The Philippine Statistics Authority is scheduled to report October inflation data on Nov. 5.

The overall rise in the prices of widely used goods clocked in at 0.9% in September, matching the pace in May 2016 and the slowest also since April that year.

Rice accounts for 9.59% of the theoretical basket of goods used by a typical household that is the basis for computing year-on-year overall price changes, while liquid fuel, solid fuel, gasoline and electricity contribute 0.13%, 1.22%, 1.28% and 4.8%, respectively.

Romeo L. Bernardo, economist at GlobalSource Partners, said that the ASF could have caused an uptick in prices of substitute products. “Demand for pork continued to decline and consumers may have substituted pork with other meat products, causing an uptick in the price of these particular alternatives. This could, however, be offset by the decline in rice prices and the recent roll back in fuel prices,” Mr. Bernardo said in an e-mail.

“Inflationary pressures should strengthen towards moving towards year end and in 2020. Food prices could temporarily be affected by the ASF outbreak,” BDO Unibank, Inc. Chief Market Strategist Jonathan Ravelas said in a mobile phone message.

Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said muted inflation was supported by stable prices of many basic commodities, noting that “[p]rices of oil may have increased but it hardly gave pressure on prices of basic consumer products as proven by a slowdown in interest rates…”

“Better weather in 2019 coupled with the stable supply of rice after ‘tariffication’ will help keep food inflation negative again in October,” ING NV-Manila Senior Economist Nicholas Antonio T. Mapa said, referring to Republic Act No. 11203 which opened up rice importation when the law came into effect in March.

Analysts also said that inflation may have bottomed out in October, as base effects have begun to subside.

“It is very likely that this will be the bottom for 2019. We should see a more normal two percent print or higher by Jan[uary] 2020,” said Bank of the Philippine Islands Lead Economist Emilio S. Neri.

“Importantly, the low base effect will now begin to diminish so inflation in the last two months of the year should be slightly higher,” ANZ Research Economist Mustafa Arif said.

Analyst Estimates