Philippine headline inflation for the month of November dropped to 4.1%. This was below the consensus expectation of 4.4% and lower than the 4.9% print in October. This brings the year to date average to 6.2%, which is still way higher than the Bangko Sentral ng Pilipinas (BSP) target range. <\/p>\n\n\n\n
Core inflation also decelerated to 4.7% from 6.5% in the same period last year. The main driver for the drop was the lower growth in the food and non-alcoholic beverages index, which went from 7% to 5.7%. Higher year-on-year growth rates were observed in the indices of rice and milk, other dairy products, and eggs.<\/p>\n\n\n\n
However, this was offset by declines in the indices of corn and oils and fats. Lower inflation rates were also noted in flour, bread, other bakery products, pasta products, and other cereals, among other food items. Other contributors was the 0.8% annual decrease in transport and the restaurants and accommodation services index, which went from a 6.3% year on year increase to 5.6%.<\/p>\n\n\n\n
Our View: <\/strong>The country’s November consumer price index made a reversal, posting a 0.16% increase from the preceding negative growth of 0.16% in October. Nonetheless, the increase was low for a typically high sequential inflation month like November. The lower-than-expected November CPI has prompted a revision in our full-year 2023 forecast, now standing at 6%, down from the previous estimate of 6.2%.<\/p>\n\n\n\n Looking ahead to 2024, the full-year inflation outlook has been adjusted to an average of 4.6%, down from the earlier projection of 5.2%. The Bangko Sentral ng Pilipinas (BSP) is positioned to reach the upper band of its target inflation range in the coming month. <\/p>\n\n\n\n With inflation projected to hit a near-term low of 3.8% in January or February, there arises a possible scenario for the BSP to consider interest rate cuts as early as the 1st quarter of 2024. They may opt to pause as a pickup in headline inflation is anticipated by the middle of next year. Headline inflation should pick up by the middle of 2024, going back above 5% by June or July.<\/p>\n\n\n\n