Economists confident October
inflation will be tamer year-on-year

By Rommer M. Balaba
Reporter

ECONOMISTS are confident October prices of the Filipinos’ consumer basket were again tamer year-on-year and such trend would continue until yearend with positive fundamentals tempering inflation rates.

“The inflation rate would largely be on expectations barring unexpected movements in oil prices. There is no telling if Opec (Organization of Petroleum Exporting Countries) can make good on its attempt to cut down production,” Cielito F. Habito, director of the Ateneo Center for Economic Research and Development, said in a telephone interview.

October inflation figures are due for release today, Tuesday. The movement in prices of consumer goods in September slowed to 5.7 percent from 6.3 percent a month earlier.

Aside from lower oil prices, economists also pointed the local currency’s strength versus the US dollar have negated whatever inflationary inclinations caused by Typhoon Milenyo, which hit the country prior to October. The peso’s appreciation, in turn, was boosted by strong remittances from abroad.

“There was no serious residual effect on consumer prices since what was affected were not crops or aggregate farm output but logistics, which was corrected immediately. So the idea of arbitrage among businessmen disappeared quickly,” Victor A. Abola of the University of Asia and the Pacific said.

As such, Abola is optimistic October inflation would slow down at 5.5 percent and with the remaining two months registering about 5 percent.

“Last year’s inflation rates [for the two months] were high because of the imposition of the expanded value-added tax… the base effect would now come in,” he added.

Ernesto M. Pernia of the University of the Philippines-School of Economics agreed, saying inflation rates remain in a downtrend if the main contributory factors of softening of oil prices, strong OFW remittances and good farm output continued.

On the remittances, Habito said the emerging trend among OFW families investing their money in other activities other than consumption is also easing any upwardly pressure on consumer prices.

OFW remittances nearing yearend traditionally have been earmarked for holiday spending.

“There is not necessarily pressure on consumer prices because of other avenues for OFW money other than spending,” he added.