Higher inflation seen in January

Inflation likely picked up further in January compared to previous months as higher “sin” and oil excise tax rates kicked in on top of higher prices of some basic goods in the Cavite, Laguna, Batangas, Rizal and Quezon (Calabarzon) area due to the eruption of Taal Volcano.

The 14 economists who responded to the Inquirer’s poll last week had a wide range of headline inflation forecasts for January, with a low of 2.2 percent year-on-year and a high of 3.1 percent. Majority of the projections were higher than the 2.5 percent registered in December.

The government will release the January inflation data today, Feb. 5.

Among private economists, Capital Economics’ Alex Holmes and UnionBank’s Ruben Carlo O. Asuncion shared the lowest January forecast of 2.2 percent.

Asuncion mainly attributed his projection to lower global oil prices, consequently pushing domestic fuel distributors to cut fuel prices, and the downward adjustment of electricity prices by the Manila Electric Co., while Holmes said the price impact of the two typhoons that battered the country in December had already faded.

University of Asia and the Pacific’s Victor A. Abola’s forecast was 2.5 percent, pointing out that Meralco rates in January fell by 4.2 percent while crude oil prices starting plunging by mid-January.

BDO Unibank’s Jonathan L. Ravelas projected 2.6 percent HSBC’s Noelan Arbis, Oxford Economics’ Thatchinamoorthy Krshnan and Sun Life Financial’s Patrick M. Ella said headline inflation likely rose 2.7 percent year-on-year last January as Ella pointed to mild gains in the food, utilities and transport baskets.

“The base effects that caused inflation to pick up in December should continue to affect January 2020 inflation but to a smaller extent,” Krshnan said.

For ANZ Research’s Mustafa Arif, Bank of the Philippine Islands’ Emilio S. Neri, and Rizal Commercial Banking Corp.’s Michael L. Ricafort, the January rate was 2.8 percent as Arif said food prices would likely be higher due to inclement weather.

ING Bank’s Nicholas Antonio T. Mapa and Security Bank’s Robert Dan J. Roces both see last month’s inflation at 2.9 percent on higher food prices. University of the Philippines-Los Baños’ Agham C. Cuevas had the highest forecast of 3.1 percent “owing to higher food prices.”

As for FocusEconomics’ Lindsay Ice, full-year 2020 inflation would likely settle at 2.9 percent, “supported by demand-side pressures and hikes in excise taxes on certain products including alcohol and tobacco.” —BEN O. DE VERA INQ