Economists forecast slower inflation in June

Headline inflation likely eased in June, but economists warned that the rate of increase in prices of basic commodities would stay higher than the central bank target for the rest of the year due to upward global food and oil price pressures.

All 14 forecasts from the Inquirer’s poll last week were below 4.5 percent but above the Bangko Sentral ng Pilipinas’ target of a manageable 2-4 percent. Inflation remained at 4.5 percent for the third straight month in May.

The Philippine Statistics Authority will release the June inflation data on Tuesday, July 6.

Rizal Commercial Banking Corp.’s (RCBC) Mike Ricafort had the lowest forecast of 4.1 percent year-on-year, which he mainly attributed to the “temporary reduction in tariff rates for pork and rice, which would have already resulted in some gradual reduction in local meat prices.”

Also, “bumper harvests have led to lower prices of food and other agricultural products in recent weeks and months, though there has been some pickup in some agricultural prices at the onset of the rainy season,” Ricafort added.

‘Watch the trend’

Six economists projected June inflation at 4.2 percent: Capital Economics’ Alex Holmes, Maybank’s Zamros Bin Dzulkafli, Natixis’ Junyu Tan, Pantheon Macroeconomics’ Miguel Chanco, Philippine National Bank’s (PNB) Alvin Arogo and Security Bank’s Dan Roces.

“Nonmonetary measures by the government help to keep food inflation at a manageable level. But we need to watch the trend in global crude oil prices,” Dzulkafli said.

Four economists see inflation hitting 4.3 percent, namely: ANZ’s Sanjay Mathur, Banco de Oro (BDO) Unibank’s Jonas Ravelas, Barclays’ Angela Hsieh and ING’s Nicky Mapa.

“Headline inflation likely fell moderately on a year-on-year basis, but increased month-on-month, reflecting increases in fuel costs and electricity prices, which offset lower food prices,” Hsieh said.

The highest forecast of 4.4 percent was shared by three economists: Bank of the Philippine Islands’ (BPI) Jun Neri, HSBC’s Noelan Arbis and UnionBank’s Carlo Asuncion.

But unlike most of the other economists, Asuncion does not see global oil prices posing an upside risk to the inflation outlook. INQ