Jan inflation likely slowed to 1.2-1.4%


INFLATION could have eased to a range of 1.2 percent to 1.4 percent in January, analysts polled by The Manila Times said, which means that monetary authorities are unlikely to adjust policy when they meet later this month.

Inflation accelerated to 1.5 percent in December from 1.1 percent in November. Official January data will be released on Friday. The Bangko Sentral ng Pilipinas (BSP), whose policy-making Monetary Board meets on February 11, has offered a forecast range of 0.8 percent to 1.6 percent.

The rise in consumer prices settled at 2.4 percent in January 2015.

Providing the highest estimate was Metropolitan Bank and Trust Co. (Metrobank) research analyst Mabellene Reynaldo, who said inflation likely hit 1.4 percent last month as a broad increase in food prices was mitigated by still soft fuel prices.

“We expect commodity prices to remain weak for the time being and thus there is no pressure for the BSP to change its policy stance,” she said.

Joseph Incalcaterra, Asia-Pacific economist for banking giant HSBC, said inflation could have eased to 1.3 percent. The result, he added, will not have any significant implication on monetary policy over the short term.

“Inflation will likely head to the mid-point of the 2-percent to 4-percent target range by the second half of the year. The BSP will be focusing on implementing the interest rate corridor,” he said.

Holding the same forecast was Diana del Rosario, economist at Deutsche Bank Research, who pointed to lower electricity rates and fuel prices.

“However, we see inflation picking up after January through year-end, which could prompt the BSP to hike policy rates in the second half of 2016,” she said.

Nicholas Antonio Mapa, associate economist at the Bank of the Philippines Islands also sees inflation as having settled at 1.3 percent. He expects the central bank to maintain policy rates until the second half of 2016.

The same estimate was also offered by Rahul Bajoria, economist at United Kingdom-based investment bank Barclays.

Providing the lowest estimate was Eugenia Victorino, Asean and Pacific economist at ANZ Research, who said inflation could have slowed to 1.2 percent in January.

“Retail pump prices have been posting weekly pullbacks for eight straight weeks, leading to a fare cut on public utility jeepneys effective on January 22,” she noted.

Victorino said ANZ continued to expect BSP policy rates to remain on hold through the first half of this year.

Central bank Governor Amando Tetangco Jr., in explaining the central bank’s 0.8 percent to 1.6 percent projection for January, last week said, “the decline in power rates, lower domestic oil prices, and downward adjustment in the minimum jeepney fare could offset the slight uptick in rice prices as well the annual sin tax adjustments.”

During its final 2015 policy meeting last December, the Monetary Board kept the central bank’s overnight borrowing and lending rates at 4 percent and 6 percent, respectively.

The 2016 inflation 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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