Economists see July inflation at 2.8% | Inquirer Business

Economists see July inflation at 2.8%

By: - Reporter / @bendeveraINQ
/ 05:26 AM July 31, 2017

Economists expect inflation in July to likely match the 2.8 percent recorded in June as prices of food and oil remained steady.

Based on a poll covering seven economists last week, the average rate of increase in the prices of basic goods in July could have settled at 2.8 percent, faster than the 1.9 percent in the same month last year.


The official July inflation figure will be released on Friday.

For Ateneo de Manila University economics professor Alvin P. Ang, the headline inflation rate this month would be the same as June’s as “there is no significant price shocks this July except the rains and the peso depreciation that happened at the last two weeks of the month.”


The peso was trading at almost 11-year low levels since late June.

Metrobank research analyst Pauline May Ann E. Revillas also sees a 2.8-percent inflation “amid the mixed movement in the prices of food items and low petroleum product prices.”

Bank of the Philippine Islands vice president and chief economist Emilio S. Neri Jr. said his forecast for July was 2.7 percent, slightly lower than a month ago, due to steady food prices.

“Just like in June, July’s print should help ensure that the Bangko Sentral ng Pilipinas doesn’t sell too much gross international reserves to defend the peso in the foreign exchange market given the manageable impact of the Philippine peso’s depreciation on inflation. In other words, the peso can be allowed to depreciate in case the forthcoming prints for imports and remittances warrant it,” Neri said.

Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, also forecasted 2.7 percent because “inflation pressures are expected to have remained constrained in July, helped by relatively stable world oil prices.”

“Some modest increases in retail petrol prices were implemented in the Philippines in July, as well as a slight uptick in electricity prices. Some further depreciation of the peso against the US dollar during July has also contributed to higher import prices, notably for key imports such as petroleum products and natural gas,” Biswas noted.

DBS Bank Ltd. economist Gundy Cahyadi said the consumer price index likely inched up to 2.9 percent this month.


“Given the current inflation picture, it does look like there is now less pressure on the central bank to act on rates. Nonetheless, the key factor that may push the BSP to hike rates remains prevalent. Markets still seem to be complacent of the US Fed rate trajectory going into 2018 and 2019. Not only any shift in market expectations will put upward pressure on global rates, but it may also lead to a new bout of volatility in the markets,” Cahyadi said.

Headline inflation averaged 3.1 percent in the first half, within the government’s 2-4 percent target range for 2017.

“The BSP certainly has room to keep rates steady now. But the central bank also has room to do with a couple of rate hikes in the coming months,” Cahyadi added.

Banco De Oro Unibank Inc. chief market strategist Jonathan L. Ravelas’ forecast was also 2.8 percent.

But for Land Bank of the Philippines market economist Guian Angelo S. Dumalagan, the July inflation could be a higher 3 percent due to the combined effect of higher crude costs and weaker peso.

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TAGS: Inflation, July inflation, prices of food and oil
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