By means of Luisa Maria Jacinta C. Jocson, Reporter
Headline inflation probably delayed in February in the midst of the prices of rice and others Main raw materials, analysts said.
A Business world Poll of 18 analysts performed last week yielded a median estimate of 2.6% for the February Consumer Price Index (CPI). This was 2.2% -3% prediction for the month within the Bangko Sentral NG Pilipinas’ (BSP).
If realized, inflation would be slower in February than the 2.9% in January and the 3.4% clip in the same month in 2023.
This would also be the lowest monthly print in four months or since the 2.3% registered in October.
The Philippine Statistics Authority is planned to release February infection data on Wednesday (March 5).
“Upward price pressure for the month includes higher electricity rates and oil prices, and an increase in prices of important agricultural products such as fish and meat,” the BSP said in a statement.
However, these were probably outSet due to lower prices of rice, fruit and vegetables, as well as negative basic effects, added it.
“Certain gasoline and diesel prices, weaker American dollars, the lighting of electricity and rice prices will function as a compensation for broad food prices from a year ago,” said Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines (Unionbank).
Lighting up rice prices probably ensured that the CPI dropped this month, analysts said.
“(Our) February inflation forecast is 2.6% due to falling rice prices as a result of extra supply on the market because of the declaration of emergency for food security,” said Reinielle Matt M. Ereece, economist at Oikonomia Advisory and Research, Inc ..
The Ministry of Agriculture (DA) stated an emergency for food security on Rice last month, allowing the National Food Authority (NFA) buffer shares at subsidized prices. Local government units can buy NFA rice on P33 per kilo and sell it to the public on P35 per kilo.
On February 15, the DA also reduced the maximum proposed selling price (MSRP) of 5% broken imported rice to P52 per kilo from P55 earlier. This was further reduced to P49 per kilo, from 1 March.
“The largest driver of the delay was probably rice. There were not only favorable basic effects on rice, but rice prices fell month by month, ”said Aris D. Dacanay, economist for Asean at HSBC Global Research.
Chinabank Research said that the delay in inflation in February was mainly powered by lower rice prices and vegetables.
In the meantime, Mr. Dacanay said that the prices for the fuel fuel began to have started in February in the midst of falling global prices.
In February, pump price adjustments were on a net decrease in P0.05 per liter for diesel and P0.90 per liter for kerosene. However, gasoline had a net increase in P2.1 per liter.
“Furthermore, the world oil prices are on a downward trend, and although a slight increase in domestic energy prices is being observed, we expect that prices will generally stabilize,” Mr. Eece said.
In the meantime, Anz Research said that utilities and transport inflation were likely to have decreased year in February due to favorable basic effects.
Pantheon Macro -economy Chief Emerging Asia -economist Miguel Chanco also noticed on a “soothing inflation in housing and utilities, transport and restaurant and accommodation.”
The stronger peso during the month can also tame inflation, analysts said.
“The Peso changing race appreciated the US dollar so far in February versus in recent months, the strongest for the PESO in almost two months,” said Rizal Commercial Banking Corp. Chief economist Michael L. Ricafort.
“This can help relieve import costs and total inflation,” he added.
The Peso closed on P57.995 against the Greenback in Eind-Februari and appreciation with 37 centavos of its P58.365 per dollar finish in the end of January.
“Due to the relative stable prices of consumer products that have been added to a strong representation of the Dollar, it is expected that inflation for the month of February will fall,” said Emmanuel J. Lopez, professional teacher at the University of Santo Tomas Graduate School.
Inflatory
On the other hand, analysts noted that factors such as high electricity percentages could have been able to increase in February inflation.
“Slightly higher electricity prices also compensated for the fall in the prices of crude oil,” said Citi Economist for the Philippines Nalin Chutchotitham.
Manila Electric Co. (Meralco) increased the total rate with P0.2834 per kilowatt hour (kWh) to P12.0262 per kWh in February of P11.7428 per kWh in January.
“Inflation drivers In February include price increases in electricity and local oil products, as well as higher prices of selected food products such as meat, fish, fruit and vegetables,” Security Bank Corp. Vice president and research division Angelo B. Taningco.
Saving for rice, other important food products can possibly burn inflation during the month.
“Price pressure will appear in the food and utility companies,” said Moody’s analytical economist Sarah Tan.
“In particular, onion prices rose in February – no less than 70% higher than the previous month. Rising pricesFICials to inspect onion warehouses to ensure That offer is not remembered in the midst of the current Harvest season, “she added.
Data from the agricultural department showed that the selling price of local red onion on average P174.01 per kilogram from the end-Febrari.
“However, considerable price pressure were seen in other food products than rice. Prices of cabbage, bitter melons, onions and aubergines rose within the range of 30-50% year on year, because the supply conditions remain tight of earlier typhoons, ”said Mr. Dacanay.
In the coming months, headline inflation is expected to remain within the 2-4% target.
“On balance, the inflation views will remain benign with food inflation that is expected to be killed in the almost medium term,” said Anz Research.
The BSP expects inflation to be on average 3.5% this year, good for risks.
The favorable inflation execution must encourage the central bank to continue its relaxation cycle, analysts said.
“We think that overall inflation remains below the center of the VanFIcial 2-4% Target will enable the BSP to lower the rates with 25 basic points (BPS) during the next policy meeting in April, “said Anz.
Mrs Tan said that the next rate reduction could already come in April “Inflation must remain sustainably close to the center of the target range and stabilize the peso.”
The next meeting of the monetary board is planned for 3 April.
“What I see, BSP will resume in April, because we now know that BSP was planning to reduce this month, but a last-minute policy uncertainty increase caused the delay,” said Sun Life Investment Management and Trust Corp. Economist Patrick M. Ella.
Weak economic output will also make room for the central bank to continue to relieve.
“If the inflation expectations still remain subdued and anchored, we think that the MB (Monetary Board) has room to shorten the policy percentage to support GDP (gross domestic product) growth and as follow -up of the recent RRR (reserve -requirement ratio) ratio,” Mr Asuncion said.
The BSP announced last month that it will reduce the RRR of universal and commercial banks and non-bank financing with quasi-banking functions of 200 bp to 5% of 7%, from 28 March.
“A stable inflation print but a faltering GDP growth is a signal for the central bank to make a rate reduction during their next meeting,” said Mr. Eece.
“Although they have reduced the reserve requirements for banks, a policy interest reduction can increase investments and Expenses that are the most important drivers of the country. “
Unionbank expects a total of 50 BPS in cutbacks this year.
On the other hand, analysts said that the BSP can remain careful.
“Looking ahead, even with the inflation that stays within the 3-4% target range of the BSP, we think Policy and their impact on inflation and growth, “said Chinabank.
The BSP unexpectedly kept the interest rates stable at 5.75% in February, the first policy meeting for the year.
This brought a break into its relaxation cycle, because the loan costs with a total of 75 BPS last year fell due to 25-BP cuts in three straight meetings.
BSP -Governor Eli M. Remolona, Jr. said that “Global Trade inserts” encouraged the policy possession.
However, he said that the central bank is still in the relaxation and indicated the possibility of a maximum of 50 BPS of reductions this year.