Analysts forecast: Jan inflation 1.9%-2.3%

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Philippine headline inflation is likely to decelerate further to between 1.9 percent and 2.3 percent in January from 2.7 percent in December amid the continued easing of food and crude oil prices, private analysts polled by The Manila Times said.

This range fell within the central bank’s projection of between 1.8 percent and 2.7 percent rate for January as announced late last month.

Official data for January inflation is due for release by the Philippine Statistics Authority today.

Downside drivers
Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI), provided the most optimistic view of inflation for January at 1.9 percent.


“Downside drivers include food items and fuel. Also, other externalities as oil prices feed into the rest of the CPI basket,” he said.

Patrick Ella, economist at Security Bank Corp., said he is seeing a 2 percent rate for January, which will lead the central bank to maintain its key policy rates.

Rahul Bajoria, economist at UK-based investment bank Barclays, said inflation last month likely fell to 2.1 percent. He did not cite a specific basis for his estimates.

“Our January forecast is 2.3 percent with the slowdown in most food prices, along with the continued contraction in oil prices,” Mabellene Reynaldo, research analyst at Metrobank Research, said.

Reynaldo added that with the view that inflation rate will continue to decelerate, rate hikes by the Bangko Sentral ng Pilipinas (BSP) are not expected in the foreseeable future within this year, but perhaps in 2016.

“Inflation may pick up in 2016 on the back of election-related spending and coupled with pressure from any US Fed rate hike, the BSP may hike rates by 25 basis points to 50 basis points in 2016,” she said.

HSBC economist Trihn Nguyen said the banking giant expects inflation to decelerate to 2.3 percent in January on the back of lower food and transportation costs.

“We expect inflation to trend sideways in February, with a small pick-up in March,” she said, noting that the central bank has room to keep rates steady when its Monetary Board meets on February 12.

“We expect rates to stay on hold for all of 2015,” she said.

The BSP earlier announced it was seeing lower January inflation at an average between 1.8 percent and 2.7 percent.

“BSP’s assessment shows continued easing of the price pressures,” BSP Governor Amando Tetangco Jr. said.

Full-year inflation is projected by the central bank at 3 percent, down from its previous forecast of 3.7 percent, but still within the government’s 2 percent to 4 percent inflation target range for this year.

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