‘Higher food prices drove up Dec inflation’

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Analysts agree with BSP’s 1.1%-1.9% forecast
Headline inflation probably remained at 1.1 percent in December or accelerated to 1.9 percent, analysts polled by The Manila Times said, given higher food and energy prices.

Seven analysts said December inflation could have settled within 1.1 percent to 1.9 percent, the same range offered by the Bangko Sentral ng Pilipinas (BSP) last month.

The full-year forecast range was the rise in consumer prices hitting between 1.4 percent and 1.5 percent, basically in line with the central bank’s 1.4-percent estimate for 2015.

Inflation accelerated to 1.1 percent in November from 0.4 percent in October. Official December and full-year 2015 data are scheduled to be released on Tuesday by the Philippine Statistics Authority.


Providing the highest estimate was Justino Calaycay Jr., analyst at Accord Capital Equities Corp., who said December inflation could have ranged between 1.4 percent and 1.9 percent.

“Our estimates jive well with what the BSP sees although the lower end could probably be higher at 1.4 percent. We don’t think the number will pass the 2-percent mark,” he said.

Joseph Incalcaterra, Asia-Pacific economist for banking giant HSBC, said inflation could have picked up to 1.6 percent given sequential momentum arising from higher food and energy prices.

“Food prices will tick higher due to drought conditions over the past few months coupled with the impact from typhoons in December, while gasoline prices were higher in December compared to November,” he noted.

Base effects would also help inflate the year-on-year readings, Incalcaterra added.

Victor Abola of the University of Asia and the Pacific held the same forecast, noting that the uptick in food prices would have been partly offset by lower fuel prices.

Eugenia Victorino, Asean and Pacific economist at ANZ Research, expects inflation to have also increased, but at a slower pace of 1.5 percent.

“We expect headline inflation in the Philippines to have risen to 1.5 percent year-on-year in December from 1.1 percent in November,” she said.

Victorino noted that global oil prices dropped to a new lows, causing local oil companies to roll back retail pump prices.

Nicholas Antonio Mapa, associate economist at the Bank of the Philippines Islands also sees inflation as having settled at 1.5 percent on upward adjustments to utilities rates as well as the effects of storms and El Niño on the food basket.

A 1.4-percent outlook, meanwhile, was offered by Rahul Bajoria, economist at United Kingdom-based investment bank Barclays.

Providing the lowest estimate was Metropolitan Bank and Trust Co. (Metrobank) research analyst Mabellene Reynaldo, who expects the rise in consumer prices to have stayed at 1.1 percent.

“Drivers for the estimate are steady food prices and a low 2014 base,” she said.

Inflation in December 2014 settled at 2.7 percent.

Central bank Governor Amando Tetangco Jr., in explaining the central bank’s 1.1 percent to 1.9 percent projection for December, last week said: “The increase in LPG [liquefied petroleum gas]prices, an electricity rate adjustment, a transitory increase in food prices due to Typhoon Nona and the weaker peso could provide upward inflation pressures.”

“Meanwhile, lower domestic rice and petroleum prices could keep inflation subdued for the month,” Tetangco added.

In December, the policy-making Monetary Board kept the central bank’s overnight borrowing and lending rates at 4 percent and 6 percent, respectively.

The 2015 inflation forecast was also retained at 1.4 percent. For 2016, the forecast was revised upward to 2.4 percent from 2.3 percent and that for 2017 was revised to 3.2 percent from 2.9 percent.

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