By means of Luisa Maria Jacinta C. Jocson, Reporter
Headline Inflation REStable in January in January, because lower utility costs compensate for a peak in food prices, proved provisional data from the Philippine Statistics Authority (PSA).
The consumer price index (CPI) rose by 2.9% year after year in January, the same as December. It also settled within 2.5% -3.3% prediction of the Bangko Sentral NG Pilipinas (BSP).
The January print was also slightly higher than the 2.8% median estimate in one Business world Poll of 16 analysts.
“The newest inflation result is consistent with the assessment of the BSP that inflation remains anchored in the target range during the policy horizon,” the Central Bank said in a statement.
Core inflation, which settled the volatile prices of food and fuel in the discount in 2.6% in the month – slower than 2.8% in December and 3.8% a year ago.
The heavily weighted food and non -alcoholic beverage index remained the best contribution to the total CPI in January, good for a share of 50.3%, said national statistician Claire Dennis S. Mapa.
The index accelerated to 3.8% in January of 3.4% a month earlier and 3.5% in the same period a year ago.
Food inflation only accelerated to 4% of 3.5% in December and 3.3% in 2024.
Vegetables, tubers, plantins, cooking banans and pulses rose in January to 21.1% of 14.2% in December and the decrease of 20.8% in the previous year.
In particular, tomato prices had a much faster annual growth rate of 155.7% of 120.8% a month earlier. This was good for 0.4 percentage point (PPT) or 12.4% of January inflation.
Mr Mapa said that the rise in vegetable prices partially reflected the impact of typhoons.
Various storms met the country in the fourth quarter, which led to billions of pesos of agricultural damage.
The rise in the prices of meat and other parts of slaughtered land animals rose to 6.4% of 4.9% month after month. Meat From pigs rose to 8.4% of 5.1%, while the meat from the poultry to 8.4% climbed from 7.7%.
Mr Mapa said that higher pig prices in some regions were due to cases of African pig fever (ASF).
Data from the Bureau of Animal Industry showed that around 88 municipalities in 19 provinces had active ASF cases.
In the meantime, fish and other seafood also accelerate up to 3.3% of 1% per month earlier.
Rice Downrend
On the other hand, rice inflation in January closed to 2.3% of the clip of 0.8% in December and an increase of 22.6% a year earlier.
This was also the lowest since the -2.8% rice inflation print in June 2020. It was also the first time that Rice placed a contraction since the -0.1% in December 2021.
“Based on the current trend of prices, it is expected that we will expect a negative inflation for rice at least until July,” Mr Mapa added.
In January, the average price of regular ground rice fell to P48.25 per kilogram a year earlier from P49.65. Well-made rice decreased to P54.14 from P54.91, while special rice dropped to P63.13 of P63.90 years after year.
The agricultural department declared an emergency for food security on rice on Monday, which remained stubbornly high despite the reduction of rates. The statement will enable the National Food Authority to release buffer shares at subsidized prices to reduce the costs of the basic grain.
“Every action to lower the rice price is always beneficial for our Filipino consumers, because rice has a heavy weight in our CPI basket,” said Mr. Mapa.
In the meantime, the PSA said that the housing, water, electricity, gas and other fuels index also made an important contribution to inflation, which reduced 2.9% to 2.9% in December in December. However, it rose from the 0.7% print a year ago.
Manila Electric Co. reduced the total rate with P0.2189 per kilowatt hour (kWh) to P11.7428 per kWh in January of P11.9617 per kWh in December.
Data from the PSA showed that the inflation of the rent delayed up to 2% of 2.4% in December, while the water supply relieved to 6.2% of 6.8%.
The water rates rose in January. Manila Water Co. Increased rates with P5.95 per cubic meter, while Maynilad Water Services, Inc. Rates with P7.32 per cubic meter raised.
Transport inflation also took somewhat up to 1.1% of 0.9% in December and the decrease of 0.3% a year earlier.
In January, the adjustments to the pump price were a net increase in P2.65 per liter for gasoline, P4.80 per liter for diesel and P3.80 per liter for kerosene.
Data from the PSA showed that inflation for the lower 30% of the income households in January closed to 2.4% of 2.5% per month in advance and 3.6% in the previous year.
Consumer prices in the National Capital Region (NCR) fell in January to 2.8% of 3.1% in December. Outside NCR, inflation established 2.9%, the same as a month ago.
The central bank said that inflation will probably relieve further in the coming months.
“The rice rate reduction and negative basic effects are expected to support disinflation,” said it.
However, the BSP noted that the risks for inflation -front views continue to lean to the advantage, with reference to ‘potential upward adjustments In transport rates and electricity percentages. “
“The impact of lower import tariffs on rice remains as the most important downward risk for inflation … However, uncertainty in the external environment can temper economic activity and market sentiment,” it added.
National Economic and Development Authority Secretary Arsenio M. Balisacan said that the government is working on tackling food inflation because it remains “one of the most urgent priorities of the government”.
He said that the government is carrying out interventions to reduce La Niña’s impact and increase vaccinations against ASF, in addition to other measures to help tame inflation.
Navigate risks
In the meantime, HSBC Economist said for Asean Aris D. Dacanay that the risks for inflation -front views have been tilted to the disadvantage, with reference to tariff reductions, the recent declaration of the emergency of food security, as well as the implementation of a maximum proposed selling price for rice.
Analysts expect the monetary council to lower the rates at its first policy assessment of the year next week.
Bank of the Philippine Islands Lead -Economist Emilio S. Neri, Jr. said that the possibility of a BSP rate reduction has increased on 13 February as inflation offers space for relaxation.
“Despite the slight upward surprise, we expect that the BSP will continue to release the monetary reins to build support for support Domestic question, “said Mr. Dacanay.
HSBC expects the monetary board to cut with 25 BPS during the meeting of 13 February.
“Inflation is still within the lower range of the 2-4% target tape of the BSP, which gives the central bank space to maneuver and to shift his focus on growth somewhat,” said Mr. Dacanay.
The weaker then expected GDP data can also “encourage the central bank to prioritize growth,” Mr Neri said.
The Filipino economy grew with a slower than expected 5.2% in the fourth quarter, resulting in the growth of 2024 at 5.6% all year round. This was not due to the target of the government with 6-6.5%.
Mr Neri said that the central bank will probably also consider the currency in her next policy decision.
“The peso can come under pressure if the Federal Reserve leaves the interest rates unchanged for longer. The BSP seems to be open to USD/PHP that goes higher as long as inflation remains within the goal, “he added.
Mr Neri said, however, that it is unlikely that it is further to relax that this year is aggressive.
“Nevertheless, we believe that the scope for cutbacks is limited this year. Apart from the interest differential driven portfolio outflow, the considerable shortage of the economy makes the economy more vulnerable to intensifying external shocks, ie worldwide trade stresses. “
BSP -Governor Eli M. Remolona, Jr. This year has indicated the possibility of 50 bps in tariff reductions, with reference to that 75 BPS or 100 BPS may be ‘too much’.
This can be supplied in steps of 25 BPS each in the first and second half of the year, he added.
However, the BSP chef has said that a rate reduction is still on the table during the meeting of 13 February.
“The aggressive lowering of the policy speed can strengthen this vulnerability and exert unmanageable pressure on the peso. That is why this year we will continue to expect a total of 50 BPS in RRP rate reductions, which will bring the policy percentage to 5.25% per year, “Mr Neri added.
The central bank started its relaxation cycle in August last year and fell the loan costs with a total of 75 BPS against the end-2024. It delivered three straight tariff reductions and brought the benchmark to 5.75%.
Rebase
In the meantime, the PSA said that it will change the basic year of price indexes in 2023 from 2018 from January 2026.
“We look at rebuilding until 2023 and the technical staff does all the preparatory work,” said Mr. Mapa.
“I don’t think next year this year. We do rebasing for both GDP and inflation, both 2023, “he added.
The PSA rebased the CPI periodically to ensure that the CPI market basket catches goods and services that are usually purchased by households over time, update the expenditure patterns and synchronize the base year with that of GDP and other indices.
The Rebasing is also in accordance with a PSA management resolution that approved the synchronized rebasing of price indexes until basic year 2006 and every six years thereafter
“We are currently doing that we look at the raw material articles of the latest research into family income and expenditure. We can adjust the weights of raw materials items, “Mr Mapa said in mixed English and Filipin.
The PSA adjusts the weights of these items based on consumption, he added.
“Secondly, we also look at items that are new in 2023 versus 2018.
“If you have an inflation report, there are around 500,000 items throughout the country that the PSA collects. It takes considerable time to prepare and get all this data, “he added.
The PSA approved the CPI rebase until 2018 from 2012, which came into force in 2022.