Inflation Surprises To The Downside, Amid Colling Food, Recreation Prices

October inflation data was weaker than expected. We printed at 4.9% y/y (5.6% forecast and 6.1% prior). The m/m outcome was -0.2%, versus 0.4% forecast and 1.1% in Sep. Note we were also below the bottom end of the BSP's forecast range from a y/y standpoint (5.1% to 5.9%).

• Core inflation was at 5.3%y/y, versus 5.9% prior. This is back to early Q4 levels from 2022.
• In terms of the detail, 9 out of the 12 sub categories saw either a lower y/y pace or the same print. Only 3 categories saw a rise (clothing, housing and IT). Food inflation eased back to 7.0% y/y from 9.7%. Rice inflation was 13.2%, down from recent highs above 17%. Restaurants and accommodation also stepped lower to 6.3%y/y from 7.1%.
• This data should give some comfort to BSP hawks. Note the next policy meeting is on Nov 16.
• Yesterday we had comments from Finance Chief Diokno (who also sits on the BSP board) that the policy rate has reached a peak (see this BBG link for more details).
• Other data for Sep trade, showed a slightly narrower trade deficit (-$3511mn against a -$4100mn forecast). This reflected weaker imports (-14.7%y/y), while exports also slowed noticeably -6.3% y/y (prior +4.2%).