Headline inflation likely eased in October as better weather conditions helped stabilize food prices, an economist said on Monday. In a Viber message, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort told the Philippine News Agency that headline inflation likely decelerated to 5.6 percent in October from 6.1 percent last month. "Relatively better weather conditions so far in October 2023 compared to some storm damage from late July to September 2023 could have helped stabilize food prices, such as vegetables and other agricultural products," Ricafort said. Food currently accounts for more than one-third of the inflation basket. Ricafort said the palay harvest season that increased local rice supply could have also helped stabilize or even ease local palay and rice prices, which accounted for nearly 9 percent of the inflation basket. He said global crude oil prices are still relatively stable at USD87 per barrel despite some slight increase due to the Israel-Hamas war. "The peso exchange rate has been relatively stable so far in October 2023 at 56 levels, thereby could also help stabilize import prices and overall inflation," he added. However, Ricafort said an offsetting risk factor includes the El Niño drought which is projected to affect the country in the fourth quarter of the year. This could reduce rainfall and local rice and other agricultural production that could fundamentally lead to some pickup in local prices of rice and other agricultural products. "Local headline inflation could still quantitatively ease year-on-year to within the BSP (Bangko Sentral ng Pilipinas) inflation target of 2 to 4 percent starting 1Q (first quarter) 2024, mathematically due to higher base effects," Ricafort said.
Source: Philippines News Agency