Feb. inflation seen within 1.1-1.4% range

INFLATION is expected to settle within the range of 0.9-1.7 percent in February, still below the 2-4 percent government target for the year, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said last week.

Separately, economists polled by the Inquirer last week were expecting a 1.1- to 1.4-percent inflation in February.

“The fall in [prices of] rice, gasoline and LPG and the provisional rollback in jeepney fares in certain regions are seen to dampen inflation pressures for the month. However, higher power rates and domestic prices of diesel and kerosene could exert upside pressure to inflation in February,” Tetangco said in a text message to reporters on Friday.

Ateneo de Manila University economics professor Alvin P. Ang said inflation might have slowed to 1.1 percent this month “driven largely by falling oil prices.”

Standard Chartered Bank economist for Asia Jeff Ng said inflation likely settled at 1.2 percent in February.

Metrobank Research’s Pauline May Ann E. Revillas said the unit’s forecast was 1.3 percent “on account of generally lower food and gasoline prices.”

HSBC economist Joseph F. Incalcaterra said inflation hit 1.4 percent in February due to higher food prices and excise tax adjustments.

ING Bank Manila senior economist Joey Cuyegkeng also sees inflation at 1.4 percent this month, noting that the “impact of El Niño and agriculture problems continue, including output from fisheries and poultry being affected by Newcastle disease.”

Earlier, the Department of Finance’s (DOF) chief economist said inflation likely rose 1.4 percent in February from 1.3 percent in January on the back of the month-on-month increase in power rates.

In an economic bulletin last week, Finance Undersecretary Gil S. Beltran said DOF computations also showed the rate of increase in prices of basic goods slightly went up from the January level.

The DOF’s projection was also below the BSP’s 2015 inflation target range.

“Benign inflation will enable the BSP to maintain its monetary stance and sustain rapid economic growth,” Beltran said.

During its Feb. 11 meeting, the Monetary Board, the BSP’s policy-setting body, kept key policy rates while slightly cutting the inflation forecast for 2016 to 2.2 percent from 2.4 percent as downward pressures outweighed upside risks.

According to Beltran, “the slow rise in prices [in February] may be attributed to the continued decline in oil prices.” Local diesel prices were steady at P20.48 a liter during the first two months, compared with P29.07 per liter a year ago.

“While electricity rates this month rose on a month-on-month basis, year-on-year figure shows a decline by nearly 16 percent,” he added.

Meralco’s rate per kilowatt hour for 300 kilowatt per month consumption increased to P9.14 in February from P8.72 last January, although lower than P10.87 a year ago.

DOF data also showed minimal month-on-month increases in the prices of food and non-alcoholic beverages, alcoholic beverages and tobacco, as well as furnishings and household equipment.

Beltran said “threats to price stability will come from the supply side.”

“For example, the dry spell [due to El Niño] may diminish fish catch,” he said.