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Jan inflation seen to rise to 3.1%

() - February 4, 2004 - 12:00am
Philippine consumer prices likely rose 3.1 percent in the year to January, a pace unchanged from a month earlier but faster than the 2.7-percent rise in the year through January 2003, according to a Reuters survey.

Most of the analysts from six financial and research houses expected inflation to pick up in the months ahead as the election campaign ahead of the May 10 polls gives consumption a boost.

They said rising oil prices aggravated by a weakened peso, and increased production costs in recent months would force manufacturers to raise prices faster this year, further stoking inflation.

"Bottled-up manufacturing costs in the second half of 2003 and the base effect are expected to renew the inflation cycle," said Jun Trinidad of Citigroup in a research note.

"The latest update on manufacturing costs represented by the Producers’ Price Index shows an 8.2 percent year-on-year uptick in November 2003 is likely to be passed on gradually starting in January," he said.

The analyst estimated year-on-year January inflation would come in at 3.5 percent.

Philippine central bank Governor Rafael Buenaventura said last Friday he expected the inflation rate in the 12 months to January to come in at 3.2 to 3.6 percent.

The January inflation figure is due to be released by the National Statistics Office tomorrow.

Jojo Gonzales, managing director of Philippine Equity Partners Inc, said retail prices could be pushed up by higher government spending ahead of the elections.

A Reuters poll of 17 analysts last week produced a median inflation forecast of 4.0 percent for 2004, up from 3.1 percent last year.

But Trinidad of Citigroup said he did not expect the Philippine central bank to raise its policy rates soon in a bid to restrain public and consumer spending.

"The renewed inflation cycle would not necessarily cause the BSP to shift to a tightening mode and raise its policy rates. The estimate is well below the BSP’s inflation target range of 4.5-5.0 percent in 2004," he said.

The National Statistics Office said yesterday it will start releasing later this week monthly retail core inflation data, which exclude volatile or seasonal food and energy prices.

"The concept of core or underlying inflation aims to filter out the effects of temporary disturbances of shocks on the consumer price index," the agency said in a statement.

BUT TRINIDAD OF CITIGROUP GOVERNOR RAFAEL BUENAVENTURA INFLATION JOJO GONZALES JUN TRINIDAD OF CITIGROUP NATIONAL STATISTICS OFFICE PHILIPPINE EQUITY PARTNERS INC PRICE INDEX YEAR
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