June inflation at 1.4-1.8%


INFLATION in June must reflect an increase in petroleum prices offsetting the impact of lower food prices and utility rates, keeping the rate within the 1.4 percent to 1.8 percent range, analysts polled by The Manila Times said.

This compares with the 1.6 percent headline inflation recorded in May and stays well within the expected range of 1.2 percent to 2 percent by the central bank.

The Philippine Statistics Authority is releasing the official inflation data today.

Lower food prices
Analysts from Metrobank Research, Bank of the Philippine Islands (BPI), and Security Bank Corp. expect the inflation rate in June to have settled at 1.4 percent, compared with 1.6 percent in May.

“Local prices remain low in June, with food mostly posting slower inflation and dragging the overall index down despite the slight upside movement in oil prices. Research estimates June inflation at 1.4 percent,” Mabellene Reynaldo, analyst at Metrobank Research, said.

Meat and vegetables may have registered higher prices month-on-month, but coming a high base a year earlier when supply bottlenecks occurred likely drove food prices to move at a slower pace year-on-year, Reynaldo noted.

While oil prices rose slightly in the early part of June, there were obvious declines toward the latter part amid concerns over the Greek debt crisis, she said.

“Expect inflation at a lower range due to a lack of upward drivers, along with the high base during the third quarter of the year,” the analyst added.

Nicholas Antonio Mapa, associate economist at BPI, also looks at prices to have settled at 1.4 percent in general on “slower inflation in the food and the utilities group due to a rate adjustment.”

Meralco incurred a generation charge that was lower by 84 centavos per kilowatt-hour (kWh) in June, which translates into a P168 downward adjustment for household consuming 200 kWh per month.

Patrick Ella, economist at Security Bank, says inflation is settling at 1.4 percent without any explanation.

Victor Abola, economist at University of Asia and the Pacific (UA&P), said consumer prices likely settled at 1.5 percent. He also did not specify the basis for his estimate.

Bill Diviney, analyst at UK-based investment bank Barclays, said inflation likely revved up a bit to 1.8 percent.

“We are looking at 1.8 percent in June, with higher rice and petrol prices offsetting cuts to electricity tariffs,” he said.

Downside pressures
Earlier, the Bangko Sentral ng Pilipinas (BSP) said it expected June inflation somewhere between 1.1 percent and 2 percent on average.

“Lower diesel, kerosene, LPG prices and the decline in Meralco electricity rates were the downside pressures for the month,” BSP Governor Amando Tetangco Jr. said.

But the slightly higher prices of rice and gasoline and tuition fees likely neutralized the downside pressures, Tetangco said.

In May, headline inflation traced the slowest pace in two decades at 1.6 percent from 2.2 percent in April and 4.5 percent a year-earlier. It was the slowest pace of inflation since 1998.

For the whole of 2015, the central bank expects headline inflation to average at 2.1 percent before picking up pace at 2.5 percent in 2016.


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