DBS sees 3.1% inflation in Sept

Danessa Rivera (The Philippine Star) - October 3, 2017 - 4:00pm

MANILA, Philippines — DBS Bank Ltd. said inflation is expected to stay steady at 3.1 percent in September but still expects the Bangko Sentral ng Pilipinas (BSP) to raise interest rates in the fourth quarter.

Amid the steady headline inflation, DBS economist Gundy Cahyadi said core inflation that excludes the volatile food and energy products is seen rising gradually.

Cahyadi pointed out two factors may be behind the gradual rise in core inflation.

He explained domestic demand remains firm even as it moderates.

Private consumption growth is still trending six percent, while total investment growth is likely to come in near the 10 percent level this year, according to Cahyadi.

The economist said the weakening peso is likely to have fueled inflationary expectations in the economy.

The peso is the worst performing currency in Asia this year, having weakened by three against the dollar this year.

“Expect BSP to turn more hawkish in the coming meetings. We maintain our call for a 25 basis points rate hike in the Philippines in the fourth quarter and first quarter of 2018,” he said.

The BSP’s Department of Economic Research sees inflation ranging between 2.8 percent and 3.6 percent in September due to higher fuel, electricity and food prices.

Headline inflation climbed to 3.1 percent in August from 2.8 percent in July, bringing average inflation to 3.1 percent in the first eight months.

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