November inflation: BSP at a crossroads?

PHILIPPINES - In Brief 09 Dec 2023 by Diwa Guinigundo
Early last week, the Philippine Statistics Authority (PSA) released the November 2023 headline inflation rate, and it must have caused early holiday rejoicing to both the Philippines’ National Government (NG) and the Bangko Sentral ng Pilipinas (BSP). At 4.1%, last month’s inflation rate is the 3rd consecutive monthly slowdown of year-on-year inflation. It’s nearly half of last year’s November inflation rate of 8.0%. Even so, the eleven-month average stood at 6.2%, still way above the official target of 2-4%. In the last six years, based on the BSP-projected risk-adjusted whole-year average of 6.1%, this year’s inflation would be the highest. It is expected that the easing drift could continue through December 2023, given some base effects.The December 2022 headline inflation was last year’s peak, at 8.1%. What factors further reined in inflation pressures? With some normalization of food supply and logistics, the heavily-weighted food and non-alcoholic beverages recorded lower inflation of 5.7% from 7.0% last month. It was vegetables, tubers, plantains, cooking bananas, complemented by the favorable price movements in fish and other seafood products that drove food inflation to further decelerate. Lower price growth of transportation, as well as of restaurants and accommodation services, further supported the diminishing momentum of price movements in November 2023. The rest of the consumer basket of goods and services exhibited either actual decline or zero price movement. Headline inflation in both the National Capital Region (NCR) and those areas outside NCR showed parallel downtrends. The build-up in demand pressure also lessened based on the slowdown from 5.3% in...

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