HEADLINE inflation likely peaked at 3.4 percent in March and April and will probably be more stable in the coming months on the back of lower oil and commodity prices, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
“It may have likely peaked when it hit 3.4 percent,” Bangko Sentral Deputy Governor Diwa Guinigundo told reporters in a chance interview after the central bank released its second-quarter inflation report.
Inflation accrelerated to 3.4 percent in April, the fastest in more than two years, or since hitting 3.7 percent in November 2014.
After April, inflation slowed to 3.1 percent in May and 2.8 percent in June.
So far, nothing seems to be in the near-term horizon that can stimulate inflationary pressure as oil prices have been steady with a downward bias, the central bank official said.
Commodity prices appear steady and the BSP expects the importation of 805,000 metric tons of rice will keep prices stable, Guinigundo said.
“Therefore, the path of inflation toward the rest of the year will remain basically stable,” he said.
As supply remains ample, commodity prices are expected to stay manageable, according to the central bank report.
“Food inflation could remain benign over the near term given prospects of favorable domestic supply. Meanwhile, oil prices are projected to remain flat in the medium-term as suggested by oil futures prices,” it said.
On the domestic front, crop estimates show that palay and corn production may increase due to larger harvest areas and adequate water supply in key producing regions.
Oil prices declined despite the decision by the Organization of Petroleum Exporting Countries to extend production cuts until the first quarter of 2018.
“The drop in prices of oil was attributed to the continued build-up in US inventories, the resolution of outages in Canada and Libya, and weaker oil import demand,” the report noted.
The Energy Information Administration expects Brent crude oil prices to average close to $53.00 per barrel in 2017 and above $55.00 per barrel in 2018, it said.
Forecasts by the World Bank and the International Monetary Fund also point to a moderate rise in global crude prices until 2018, it added.
Q2 inflation eases
In a briefing also on Friday, the Bangko Sentral reported that headline inflation eased slightly in the second quarter of 2017 to 3.1 percent from 3.2 percent in the first quarter.
But inflation in April to June was much faster compared with 1.5 percent in the second quarter of 2016.
Food inflation was steady in the second quarter at 3.8 percent from 3.8 percent in the January to March, but faster compared with 2.3 percent in April to June 2016.
The central bank said prices of selected food commodities posted higher increases particularly meat, fish, and oils and fats.
Rice prices went up reflecting the differences in production patterns across provinces as certain areas registered lower output due to pest infestation and floods during the vegetative stage, it said.
On the other hand, non-food inflation in the three months to June was steady at 2.4 percent, the same rate in the first quarter but faster than the 0.6 percent in April to June 2016.
The BSP said prices movements of other major commodity groups were mixed.
Clothing and footwear, medical products, and out-patient services as well as recreation and culture posted slower price increases, while pump prices of unleaded gasoline and diesel—influenced by the downward trend in global oil prices—were offset by higher prices of transport services, it said.
The inflation rate for heavily-weighted electricity, gas and other fuels rose, while higher electricity charges were counterbalanced by the slower price increases in solid fuels and liquefied petroleum gas.