Economist sees February inflation at 3%

IN DEMAND. Fruit vendors on the corner of Monteverde and Lizada Streets in Davao City said Saturday (Dec. 2, 2023) that prices are expected to soar after Christmas Day. Filipinos traditionally fill their dining tables with round fruits to welcome the new year as they believe they represent good luck and prosperity. (PNA photo by Robinson Niñal Jr.)

MANILA – Headline inflation will likely continue to settle within the government’s target but a slight pick up may be seen due to base effects and higher prices of oil, an economist said.

Rizal Commercial Banking Corporation chief economist Michael Ricafort told the Philippine News Agency on Friday that headline inflation likely settled at 3 percent in February, slightly higher than the 2.8 percent last month.

“The [pick up was] mathematically due to some easing of the high base effects. Nevertheless [it’s] still relatively slower and within the Bangko Sentral ng Pilipinas’ target of 2 to 4 percent,” said Ricafort.

Ricafort said the pick-up could also be attributed to the higher global crude oil prices.

“For February 2024 and for the coming months of 2024, there might be some pick-up in year-on-year inflation due to the gradual easing of the base effects that would quantitatively lead to some increase in the year-on-year data, as well as El Niño risks up to May 2024 that could reduce the output of rice and other agricultural products, all of which would lead to some pick up in food prices and overall inflation,” he said.

He noted, however, that could remain within the government’s target provided that there would be no escalation of geopolitical risks particularly on the Israel-Hamas war and the potential effects on world oil prices and if El Niño would not have a significant damage to agriculture output.

Ricafort forecast inflation to settle at 3 percent levels until April 2024, slightly breaching the 4 percent target from May to July and settling within the target by August to December this year.

Full-year average is projected to be at 3.6 to 4 percent, he said, if global crude oil prices remain relatively lower and if rice inflation would be managed properly.