INFLATION likely moderated for a second straight month in November, analysts said, giving monetary authorities added leeway to keep key interest rates unchanged for the rest of the year. The median forecast in a survey of 13 economists was 4.4 percent, within the Bangko Sentral ng Pilipinas’ (BSP) 4.0- to 4.8-percent projection for the month and down from October’s 4.9 percent and the year-earlier 8.0 percent. None of the analysts went as far as to predict a possible return to the 2.0- to 4.0-percent target as the central bank did, but some indicated that the goal could be achieved in December. Not all were also of the view that inflation had gone lower, with one predicting an uptick due to the impact of fuel price hikes over the year. Data for November will be released by the Philippine Statistics Authority on Tuesday, December 5. Pump price drops for November, Oxford Economics Japan assistant economist Makoto Tsuchiya said, would have helped offset higher inflation for other basic commodities. He predicted a 4.1-percent result for the month and added that the rate would remain relatively stable in December before settling within the 2.0- to 4.0-percent target in January. “Although risks are tilted to the upside given high uncertainty over supply chain disruptions and climate-related issues, CPI (consumer price index) should average 3.6 percent in 2024, higher than BSP’S target midpoint but within the target range,” Tsuchiya said. “We expect BSP to maintain its policy rate until mid-2024 before beginning to cut rates, but risks are tilted towards further hikes given inflation volatility.” Union Bank chief economist Ruben Carlo Asuncion, meanwhile, expects November inflation to have slowed 4.2 percent due to lower food and fuel prices. “We also estimate November core inflation to settle at 4.9 percent from 5.3 percent the previous period. This means more for the longer-term expectation for headline inflation,” he added. “Nonetheless, what remains certain is that we will not see a smooth, linear monthly path towards the BSP’s inflation target of 4 percent or less amid ongoing geopolitical risks that curb material downside risk to oil prices.” Rizal Commercial Banking Corp. chief economist Michael Ricafort, Bank of the Philippine Islands senior economist Emilio Neri, and HSBC Global Research economist Aris Dacanay all predicted a decline to 4.3 percent print. Ricafort based his forecast on lower global crude oil prices and exchange rates that would have helped lower import costs and thus ease overall inflation. Neri said that lower inflation could prompt the central bank to pause anew when it meets later this month. However, he highlighted upside risks such as geopolitical tensions could lead to additional interest rate hikes in 2024. Dacanay, for his part, said the combination of reduced fuel prices, elevated interest rates, and a stronger peso ought to have helped control inflation. “Nonetheless, headline CPI likely stayed above the Bangko Sentral ng Pilipinas’ 2-4 percent target band with food prices still elevated [albeit stabilizing as of late], with rice prices being the most important,” he said. “Given the risks to the inflation outlook, we expect the BSP to keep monetary policy tight [with the policy rate] at 6.50 percent while maintaining a hawkish tone — ready to raise rates if inflation flares up faster than expected.” Security Bank Corp. chief economist Robert Dan Roces, ING Manila Bank senior economist Nicholas Antonio Mapa, and Pantheon Macroeconomics economist Miguel Chanco all expect inflation to have dropped to 4.4 percent. Chanco said a continued moderation in food inflation, which probably came in at 6.0 percent from 7.1 percent in October, would have contributed to easing inflation. “If we’re right, then there is a more than good chance inflation will return to the BSP’s target range before the end of this year, i.e., in December, assuming no external or domestic shocks arise,” he added. “Our base case is that the [BSP’s policymaking Monetary] Board is done tightening, and we expect to see 100bp (basis points) worth of cuts next year to take some pressure off a wobbling economy. Mapa noted the possibility of inflation aligning with the target this month, provided that supply-side conditions were addressed. For Roces, November inflation would have been propelled by elevated food and electricity prices that were partially mitigated by a decline in oil costs. “Our latest estimates show a return of price growth in the heavy-weight food index as well as in electricity costs, plus an upward trend in restaurant and accommodations costs in a demand build-up toward the holidays, offsetting a noticeable decline in pump prices last month,” he said. “While the base effect from last year’s inflation should pull down the headline, the central bank will likely remain vigilant on the upside risks,” he added. China Banking Corp. chief economist Domini Velasquez and Philippine National Bank economist Alvin Arogo also expect inflation to have hit 4.4 percent in November. “Although domestic pump prices have continued to decrease since October, the significant price increases in LPG (liquefied petroleum gas) and electricity rates offset this decline,” Velasquez noted. “While areas serviced by Meralco (Manila Electric Co.) experienced only a slight increase in electricity rates, other regions in Luzon and Visayas saw substantial increases in electricity rates. These factors will have an impact on the overall inflation rate for November.” Velasquez projected that inflation in December would still exceed the BSP’s target. She expects a decrease to around 3.0 percent in the first quarter of 2024, followed by a subsequent rise above 4 percent from April to August due to base effects. Arogo, for his part, said an easing in November would have been largely driven by favorable base effects. “Our current projections are 4.4 percent for December, 4.5 percent for full year 2024, and inflation returning to the 2-4 percent target in the fourth quarter of 2024,” he added. “However, these may change after we incorporate the actual consumer price index data for November.” Sun Life Investment Management and Trust Corp. economist Patrick Ella and Capital Economics chief economist Shivaan Tandon, meanwhile, both expect inflation to moderate to 4.5 percent. Ella also said that this would reflect base effects plus more stable rice and food prices and the decline in fuel costs. “I see inflation returning to the 2-4 percent BSP target in the first quarter of 2024,” he said. “As for BSP, they are done with rate hikes. Now they [will continue to] pause and start cutting rates by the early second quarter of 2024.” Tandon said that lower fuel prices and a stronger currency would have led to slower inflation. “The core inflation rate is also set to have fallen further due to weak demand-side pressures in the economy,” he added. “The central bank kept interest rates unchanged at its most recent meeting in November following an emergency 25bp hike in October. But renewed falls in inflation and growing downside risks to the economy mean rates are to be left on hold in the near term.” Colegio De San Juan de Letran Graduate School economist Emmanuel Lopez, on the other hand, bucked the trend with a November inflation forecast of 5.2 percent. The uptick, he said, would be due to the impact of petroleum product prices and elevated food costs resulting from increased spending ahead of the holiday season. “This is the reason why authorities will likely hold on to a higher interest rate until the end of the year then decide otherwise if the inflation reaches its target of 2-4 percent,” Lopez said. Late on Thursday, the BSP said that November inflation could have settled within 4.0-4.8 percent. “Higher prices of most agricultural commodities like rice, fruit, fish, and meat items and adjustments in electricity, LPG, and toll rates are the primary sources of upward price pressures in November,” it said in a statement. “Meanwhile, lower prices of vegetables and petroleum products along with the peso appreciation could contribute to downward price pressures,” it added. “Going forward, the BSP will continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy formulation.”