By Katherine K. Chan, A reporter
PHILIPPINE INFLATION is possible it reached its fastest pace in more than a year as price pressures from higher electricity, oil and rice costs peaked in February, analysts said.
The consumer price index (CPI) likely stayed at 2.4% in February, the fastest pace in 13 months or from 2.9% in January 2025, based on the median forecast of 17 analysts. BusinessWorld.
If possible, recent inflation will be much faster than the 2% recorded in January and 2.1% in February 2025.
“Inflation risks in February were less about shocks and more about continued cost pressure, oil is quietly increasing the print. (I) see February (inflation) at 2.4%,” said Jonathan L. Ravelas, senior advisor at Reyes Tacandong & Co., in a Viber message.
This means that February may mark the second month in a row that inflation reached the Bangko Sentral ng Pilipinas’ (BSP) target of 2%-4%, with the average rate likewise coming in below the central bank’s forecast of 2.3%-3.1% for the month.
The Philippine Statistics Authority (PSA) will release inflation data for February on Thursday, March 5.
Bank of China Chief Economist Domini S. Velasquez similarly says that inflation is likely due to the recent increase in the prices of gasoline, liquefied petroleum gas (LPG) and electricity.
“The uptick was driven by continued month-on-month gains in rice and fish prices, as well as higher energy costs,” Ms. Velasquez said in an email. “Domestic pump prices have now increased for seven consecutive weeks, while LPG costs and electricity rates in Meralco-served areas were also higher compared to January.”
The pump price adjustment in February stood at P3.20 per liter of gasoline, P4.40 per liter of diesel and P3.50 per liter of kerosene.
National Statistician Claire Dennis S. Mapa said last week that she sees oil prices adding pressure to the increase in oil prices in February, citing weekly increases in oil prices.
LPG prices were also higher last month, with most oil companies in the country applying a P1.50- to P1.55-kilogram (kg) increase.
This brought the price of an 11 kg domestic LPG tank to between P836.50 and P1,137.05 last month, based on the data. from the Ministry of Energy.
Meanwhile, Manila Electric Co. (Meralco) raised electricity rates in February amid high transmission costs after two straight months of reductions.
It raised the rate by 22.26 centavos per kilowatt-hour (kWh) to P13.1734 kWh last month from P12.9508 kWh in January, which translates to an additional P45 in the monthly electricity bill of households using an average of 200 kWh.
COSTLIER RICE
Meanwhile, commentators have noted that rice deflation almost decreased In February as the selling price of rice continued to rise every month, which may have also fueled the headline printing.
“The uptick reflects a low impact as last year’s declaration of a rice food security emergency, which mandated the release of buffer stocks at subsidized prices, eased price pressure,” Moody’s Analytics Associate Director and Economist Sarah Tan said in an email. “Because of this, the decline in the price of rice in the past few months will lose momentum.”
Aris D. Dacanay, ASEAN economist at HSBC Global Investment Research, also noted that grain costs have increased by 3%-4% per month since January. “and supply conditions are tight.”
Data from the PSA showed that the average price of local milled rice decreased by 2.5% to P46.01 per kilo in the second half of February from P47.19 per kilo last year but increased by 5.14% from P43.76 in January.
Milled rice was also cheaper by 0.7% year-on-year to P53.54 per kilo from P53.90 but increased by 5.04% from P50.97 in January. On the other hand, the cost of specialty rice was reduced by 1.22% year-on-year to P61.55 per kilo from P62.31 but increased by 2.57% month-on-month from P60.01.
In January, the Ministry of Agriculture said the tax on imported rice would remain at 15% until March, but noted that they could bring the rate up to 20% if the price of the basic grain slides to $367 per metric ton.
Mr. Dacanay also noted that core inflation may also have moved forward in February.
“Since food components weigh heavily in the Filipino consumer basket, the pressures on core inflation are likely to spill over into the core CPI,” he said.
Inflation, which excludes volatile food and fuel prices, was the fastest in a year and a half at 2.8% in January.
THE DANGER OF EASY BSP
Inflation may continue to accelerate in the coming months, which is a trend can measure the policy of BSP way forward, say analysts.
“Inflation is expected to continue in the coming months which means that the BSP’s window of easing will remain open for a while,” said Metropolitan Bank & Trust Co. Chief Economist. T. Mapa said in a Viber message.
Last month, the central bank cut key interest rates by 25 basis points (bps) for the sixth consecutive meeting to a three-year low of 4.25% as it tries to restore confidence lost amid the flood control corruption scandal.
The Monetary Board has now delivered a total of 225-bp reductions since the start of easing in August 2024.
BSP Governor Eli M. Remolona, Jr. he said that the future policy path is now uncertain as they see “testing” signs of confidence recovery, while and noting that further expansion of monetary policy may not be enough to boost a sluggish economy.
Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. we said they reconsidered their view on one more rate for the year as they see inflation may break the central bank’s target for them in April.
In a Viber message, he said that the February print could come in at 3%, which “if possible, inflation could approach or break 4% in early April, mainly depending on rice purchases in the coming months, which we continue to closely monitor.”
The BSP now expects inflation to reach 3.6% by the end of the year, faster than the earlier estimate of 3.2%.
If i BusinessWorld The February inflation rate for the February election is evident, bringing the two-month average to 2.2%.
Mr. Remolona previously said he was more concerned about inflation exceeding their 3% target than falling below 2%.
BSP Vice Governor Zeno Ronald R. Abenoja said core inflation may breach the 3% mark in the second half of the year before settling in the middle of the target band, with the adjustment of electricity rates, high oil prices and the impact of the government’s variable rice tax plan on local rice prices likely to bring “temporary” inflationary pressure.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., also said that inflation may reach 3% in the coming months due to the increase in global oil prices amid the ongoing tensions in the country.
“In the coming months, high crude oil prices around the world, (which were) among the highest level of five months recently, and high prices of other industrial metals and other global commodity prices amid recent country risks in Iran, Venezuela, Greenland, among others, may lead to an increase in the cost of imports and overall inflation,” he said in a Viber message.
The Monetary Board is expected to hold its second policy meeting this year on April 23.
