Philippine inflation rate holds steady at 6.7% in October

Analysts are optimistic that inflation rates in the Philippines would ease during the final months of the year. (AFP)
Updated 06 November 2018

Philippine inflation rate holds steady at 6.7% in October

  • The inflation of food prices, where rice is a major component, eased slightly to 9.4 percent year-on-year from 9.7 percent
  • ‘Concerted government efforts … to tame the prices of goods in the previous months have finally resulted in expected outcomes’

DUBAI: James Mendoza, a Filipino government health worker, is looking forward to a happier celebration during the upcoming holiday season as Philippine consumer prices – which have been rising steadily since the start of the year – finally may have stabilized.
“Prices of basic commodities especially, rice have gone down, unlike in previous months when price increases were unabated,” Mendoza told Arab News. “I am looking forward to a continued reduction in prices (of basic commodities), particularly that of fuel since I use a motorbike.”
The Philippine government announced on Tuesday that inflation was heading towards a downward path with year-on-year headline inflation in October steady at 6.7 percent, similar to that of the previous month. The inflation of food prices, where rice is a major component, eased slightly to 9.4 percent year-on-year from 9.7 percent.
Slower inflation rate movements were also recorded in food items such as corn and meat, fruits and vegetables. The consumer price index for housing, water, electricity, gas and other fuels was up 4.8 percent.
The Philippines has one of the highest inflation rates among Southeast Asian countries, with only Myanmar reporting a higher 8.6 percent as of September, compared with Indonesia at 3.16 percent and Thailand with 1.23 percent both in October.
“Concerted government efforts … to tame the prices of goods in the previous months have finally resulted in expected outcomes,” a statement from the government economic team said. “And such promising results further motivate the economic team to work closely with all concerned government agencies to more aggressively implement mitigating measures to ease inflation over the medium- and long-term.”
The rosier inflation outlook presented by the government, according to Mendoza, will go some way to reassure Filipinos they will not have to dig deeper into their pockets considering “Christmas season in the Philippines is synonymous with spending – from buying gifts to eating out to celebrate the festive holiday.”
Analysts are similarly optimistic that inflation rates would ease in the final months of the year despite some price pressures such as the recent fare hike and the increase in minimum wages for workers in the Philippines’ national capital region.
“The proposed tariffication of rice imports and planned suspension of higher excise taxes on fuel and petroleum scheduled in January 2019 could help further ease inflation and inflation expectations in the coming months,” Michael L. Ricafort, head of the economics and industry research division at Rizal Commercial Banking Corporation, told Arab News. “Increased imports of rice, fish and other food items plus the non-monetary measures by the government to augment supply in an effort to ease food prices – including the imposition of suggested retail prices on rice that further eased rice prices – helped tame October inflation.”
“The appreciation of the local currency last month softened the peso value of imported goods, thereby helping control the increase in consumer prices,” Land Bank of the Philippines market economist Guian Angelo Dumalagan meanwhile said. “Moving forward, inflation is expected to gradually decline as food price pressures moderate further and as the peso stabilizes against the dollar.”
“The stabilization in annual inflation and the month-on-month deceleration in consumer prices could convince the Bangko Sentral ng Pilipinas (BSP) to refrain from hiking its policy rates again in November 2018,” Dumalagan added.
Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines’ corporate research unit, also agreed that the Philippine central bank may no longer “pull the trigger for another round of rate hikes, whether it’s 50 or 25 basis points, within this year.”
“This easing of prices levels also supports the return to inflation target range of between 2 percent and 4 percent by 2019,” Asuncion said.
Nomura economists, however, were more cautious of the inflation horizon: “Claiming the peak of inflation is in sight remains uncertain, but as we have argued before, BSP remains firmly focused on anchoring inflation expectations given the risk that headline inflation may persist above target next year (as we expect), rather pinning down the exact timing of the inflation peak to determine the course of its policy action.”
“Overall, our full-year 2018 CPI inflation forecast of 5.4 percent remains on track, which implies that for the rest of the year we expect headline inflation to average a still-elevated 6.7-6.8 percent year-on-year.”

World leaders prepare for Davos amid gloomy forecasts

Klaus Schwab, founder and executive chairman of the World Economic Forum. (AFP)
Updated 16 January 2019

World leaders prepare for Davos amid gloomy forecasts

  • Delegates to annual forum to include presidents of Iraq and Afghanistan

DUBAI: World leaders are preparing to head to the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, amid the riskiest global backdrop in years, according to a report from the event organizer itself.

As the WEF announced the names of some of the 3,000 participants set to attend the meeting and details of the four-day agenda, it also published a gloomy outlook on international politics, economics, the environment and technology. 

Rising geopolitical and geo-economic tensions are the most urgent risks in 2019, with 90 percent of experts surveyed expecting further economic confrontation between major powers, according to the WEF’s annual Global Risks Report.

“The world’s ability to foster collective action in the face of urgent major crises has reached crisis levels, with worsening international relations hindering action across a growing array of serious challenges. Meanwhile, a darkening economic outlook, in part caused by geopolitical tensions, looks set to further reduce the potential for international cooperation in 2019,” it added.

Although political and economic worries were top of the immediate agenda for the 1,000 experts polled by the WEF, the environment and climate change are also a cause for concern, as are “rapidly evolving” cyber and technological threats, the WEF said.

Børge Brende, the WEF president, said: “With global trade and economic growth at risk in 2019, there is a more urgent need than ever to renew the architecture of international cooperation. We simply do not have the gunpowder to deal with the kind of slowdown that current dynamics might lead us toward. What we need now is coordinated, concerted action to sustain growth and to tackle the grave threats facing our world today.”

The leaders who will begin to arrive in Switzerland in the next week include Shinzo Abe, prime minister of Japan; Jair Bolsonaro, president of Brazil; Angela Merkel, chancellor of Germany; and Wang Qishan, vice president of China.

With US President Donald Trump pulling out of the meeting to deal with the partial government shutdown, the American delegation is expected to be led by Steven Mnuchin, Treasury secretary, and Mike Pompeo, secretary of state.

The Middle East is well represented at the meeting, with at least nine heads of state or government from the region, including Palestine, Iraq, Egypt, Jordan and Lebanon. Saudi Arabia will be represented by a team of senior policymakers and business leaders.

The risk report will give them all food for thought in the Alpine resort.

Asking whether the world is “sleepwalking into a crisis,” the report responded: “Global risks are intensifying but the collective will to tackle them appears to be lacking. Instead, divisions are hardening. The world’s move into a new phase of strongly state-centered politics continued throughout 2018.

“The idea of ‘taking back control’ — whether domestically from political rivals or externally from multilateral or supranational organizations — resonates across many countries and many issues.”

Macro-economic risks have moved into sharper focus, it said. 

“Financial market volatility increased and the headwinds facing the global economy intensified. The rate of global growth appears to have peaked,” the report said, pointing to a slowdown in growth forecasts for China as well as high levels of global debt — at 225 percent of global gross domestic product (GDP), significantly higher than before the financial crisis 10 years ago.

Raising the prospect of a “climate catastrophe,” the report said extreme weather, which many experts attribute to rapid climate change, was a risk of great concern. “The results of climate inaction are becoming increasingly clear,’ the WEF said.

Of the 3,000 participants at Davos, which runs from Jan. 22 to 25, around 78 percent are men, with an average age of 54. 

The oldest will be the 92-year-old British broadcaster David Attenborough, the youngest 16-year-old South African wildlife photographer Skye Meaker.