Inflation seen to breach 3% in February

Most economists see inflation breaching 3 percent year-on-year or higher in February mainly due to faster food price hikes.

Among the 13 economists who responded to the Inquirer’s poll last week, five projected the rate of increase in prices of basic commodities last month to have had settled at the middle of the government’s 2-4 percent target range for 2020.

The Philippine Statistics Authority (PSA) will release its February inflation report on Thursday, March 5.

In all, nine economists expect last month’s headline inflation at 3 percent or above.

BDO Unibank’s Jonathan Ravelas, HSBC’s Noelan Arbis, ING’s Nicholas Antonio Mapa, Security Bank’s Robert Dan Roces and Sun Life Financial’s Patrick Ella shared the same forecast of 3 percent.

“Faster food inflation was offset by slower inflation for fuel and utilities” last month, Mapa said, while Roces noted that “cost-push effects from Taal’s eruption appeared to be minute, as agricultural activity was quick to recover,” referring to the volcanic explosion in January.

For Ella, “we also see COVID-19 will have a depressive impact on prices for energy (such as oil) for the moment.”

Three economists projected 3.1-percent inflation last month: ANZ Research’s Mustafa Arif, Oxford Economics’ Thatchinamoorthy Krshnan, and Rizal Commercial Banking Corp.’s Michael Ricafort.

Arif also pointed to higher food prices, while both Krshnan and Ricafort pointed to dissipating base effects from last year’s easing inflation.

Ateneo de Manila University’s Alvin Ang had the highest estimate of 3.3 percent.

Four economists had forecasts below 3 percent: Bank of the Philippine Islands’ Emilio Neri Jr. (2.9 percent); UnionBank’s Ruben Carlo Asuncion (2.8 percent); University of Asia and the Pacific’s Victor Abola (2.7 percent); and Capital Economics’ Alex Holmes (2.6 percent).

“The impact of the TRAIN Law on nonalcoholic beverages and selected petroleum products may be a swing factor,” Neri said, referring to higher excise taxes slapped on sugary drinks as well as oil products under the Tax Reform for Acceleration and Inclusion Act.

Asuncion said that while the upward pressure to consumer prices caused by Taal Volcano’s eruption dissipated, the worldwide coronavirus outbreak was likely to put downward pressure on inflation moving forward.

Abola partly attributed his forecast to the “sharp drop in crude oil prices,” while Holmes explained that “the recent weather-related spike in fish and vegetable prices should have partially unwound.”

Last Friday, the Bangko Sentral ng Pilipinas’ said its economists expected the February inflation rate at between 2.4 percent and 3.2 percent.