inflation quickens for the first time in five months in February

Philippine annual inflation sped up for the first time in five months in February due to faster increases in food and transport costs, likely giving the central bank little reason to consider lowering interest rates.

The consumer price index (CPI) rose 3.4% in February from a year earlier, the statistics agency said on Tuesday, which was above the previous month’s 2.8%, but still within the central bank’s 2% to 4% target for the year.

Economists in a Reuters poll had forecast annual inflation at 3.1% in February, within the central bank’s 2.8% to 3.6% projection for the month.

One of the main culprits behind the February uptick was rice inflation, which accelerated to 23.7% from last year, the fastest in 15 years, in a move blamed on base effects and elevated rice prices in the world market.

Core inflation, which strips out volatile food and energy items in the consumer basket, eased to 3.6% versus the previous month’s 3.8%.

The central bank last month kept its benchmark rate steady at 6.50% for a third straight meeting, expecting inflation to settle within target this year. It meets next to review policy on April 4.

ING Economist Nicholas Mapa said the central bank would likely keep rates at current levels for an extended period

Source: Business World

Inflation drops further to 2.8% in January 2024

The latest figure is lower than the 3.9% posted in December 2023, and the 8.7% recorded in January 2023

Prices of goods accelerated at a slower pace for the fourth straight month in January, as food prices continued to stabilize.

The Philippine Statistics Authority on Tuesday, February 6, reported that the inflation rate in January eased further to 2.8%, which is well within the government’s target range of 2% to 4%.

The latest figure is lower than the 3.9% posted in December 2023, and the 8.7% recorded in January 2023.

National Statistician Dennis Mapa said in a briefing on Tuesday that the slowdown was driven by food and non-alcoholic

beverages (from 5.4% in December 2023 to 3.5% in January 2024); housing, water, electricity, gas, and other fuels (from 1.5% to 0.7%); and transport (from 0.4% to -0.3%).

The Bangko Sentral ng Pilipinas earlier projected that lower prices of vegetables and sugar would contribute to downward price pressures.

But it had said that higher prices of rice, meat, fruits, and fish, along with increased petroleum prices as well as electricity and water rates, could drive up inflation.

On Tuesday, gasoline and diesel prices went up for the fifth straight week.

Gasoline increased by P0.75 per liter and diesel by P1.50 per liter.

Source: Rappler and PSA

'Topmost problem' last year: Inflation

Filipinos remain concerned about rising prices, which was the country's 'topmost problem' last year, a US-based think tank said.

Former Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo, writing for GlobalSource Partners, noted that public opinion inflation had not significantly changed based on a December national poll by Pulse Asia Research Inc.

"Filipinos continue to place grave concern about price movements, then and now," he said in a report.

"In fact, the same set of concerns prevailed as conveyed by the results of the same survey in the first three quarters of 2023," Guinigundo added.

"Inflation has thus remained the topmost problem in the country last year."

The Pulse Asia poll found 72 percent of the respondents saying that controlling inflation was the biggest national concern. Broken down, 42 percent, 20 percent and 10 percent ranked it as the first, second and third most pressing issue in the country.

The survey also "cut across all geographic areas and socio-economic groupings," Guinigundo pointed out.

The survey respondents, he noted, "could still be focusing on absolute price levels."

"While inflation is showing some easing, price levels continue to be prohibitive, especially for the lowest 30 percent of all income households."

Inflation eased to 3.9 percent in December, finally returning to the BSP's 2.0 to 4.0 percent target after hitting a 14-year high of 8.7 percent in January. The full-year average, however, was still above target at 6.0 percent.

Food inflation remained high, with rice price growth having surged to 19.6 percent last month from 15.8 percent in November.

"With rice being the staple food of most Filipinos, movements in its price significantly affect consumers' views of the government's ability to control inflation," Guinigundo said.

"The same dynamics could have been driven by selected basic items like onions and garlic and key fuel prices," he added.

Households and companies, the former BSP official continued, may have moved out of the so-called zone of "rational inattention."

"Outside of such a zone, inflation, no matter how much it establishes a downtrend, could have limited influence on their behavior. They could be more attentive to just a few items. This is very true for Filipinos who are attentive to price movements of basic commodities including rice, meat, fuel and utilities."

Guinigundo also noted that the need to raise wages was the second most-cited pressing national concern in the Pulse Asia survey at 40 percent.

Along with controlling inflation, this and generating more job opportunities (28 percent) and alleviating poverty (25 percent) are "clearly ... gut issues for the population, including the need to help farmers address the issue of involuntary hunger," Guinigundo said.

Combating graft and corruption (19 percent), assisting farmers and addressing involuntary hunger (both at 18 percent), and fighting criminality (15 percent) were also top concerns in the Pulse Asia poll.

Issues that garnered the lowest marks were dealing with terrorism and safeguarding the welfare of overseas Filipino workers (OFWs) at 5.0 percent each.

The government, Guinugundo noted, "obtained approval" with regard to half of the 14 national issues on which its performance was assessed: protecting OFWs, providing assistance to calamity-hit areas; protecting the environment; promoting peace, defending territorial integrity, fighting criminality, and enforcing the rule of law.

The former BSP official earlier this month said that monetary authorities could keep interest rates higher for longer despite declining inflation, noting that consumer price growth had yet to return firmly to the target band.

He also said that non-monetary measures, particularly those involving agricultural and logistics support, would "definitely... be helpful to the cause of inflation management."

Source: Manila Times