BSP: Inflation likely higher in February

Louise Maureen Simeon - The Philippine Star
BSP: Inflation likely higher in February
Red and white onions are being sold from 50 to 60 pesos per kilo at a public market in Lingayen, Pangasinan on February 3, 2024.
Cesar Ramirez

MANILA, Philippines — Inflation likely quickened in February after easing to its lowest level in three years in January amid more expensive electricity costs and food items, the Bangko Sentral ng Pilipinas (BSP) said.

Based on its monthly forecast, the BSP said the headline rate could settle within the 2.8 and 3.6 percent range.

The lower end of the forecast is the same rate as the January print of 2.8 percent.

If realized, the headline rate could just be flat or it could snap four straight months of easing.

According to the BSP, the continued increases in the cost of key food items such as rice, meat and fish are the major sources of upward price pressures in February.

Rice inflation likely rose last month and the Philippine Statistics Authority expects that it will continue to be higher until around July.

The BSP said that the uptick may also be due to higher petroleum and power rates.

Last month, the Manila Electric Co. announced that power rates would be higher by P0.5738 per kilowatt hour, to P11.9168 per kWh.

This is due to the higher generation charge by power supply agreements and independent power producers.

Oil prices are expected to continue to rise in the first semester due to the ongoing Middle East conflict, coupled with the diversions of oil supply from the Red Sea to longer haul around South Africa, causing higher freight rates, and war risk insurance for Red Sea transits.

On the other hand, the BSP said the lower prices of vegetables, fruits and sugar are the primary sources of downward price pressures last month.

The BSP said it would continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy decision-making.

The Philippine Statistics Authority will announce the latest headline inflation on March 5.

After it kept rates unchanged two weeks ago, the BSP said risks to the inflation outlook have receded, but remain tilted toward the upside.

The BSP lowered its inflation forecast for this year to 4.2 percent from 3.9 percent previously.

Still, the BSP said there should be a firmer indication that the inflation trend would be back to the target range of two to four percent.

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