Despite Odette, January inflation between 2 and 4%


Inflation likely remained within the 2-4% target range for the second month in a row in January, despite the ripple effects on consumer prices from last month’s onslaught of Typhoon ‘Odette’ and prices high oil.

The 21 forecasts collected by the Inquirer last week showed headline inflation below 3.9%.

The government’s January inflation report, whose consumer price index (CPI) basket of goods will be adjusted to the base year 2018 from 2012 before, would be released on February 4. The majority of economists were still using the old 2012 base in their January forecasts as they awaited the weights that would be assigned by the Philippine Statistics Authority (PSA) in the updated CPI.

Six economists were able to provide estimates using the new 2018 base: Luis Limlingan of Regina Capital, 3.2% yoy; Sonia Zhu of Moody’s Analytics, 3%; Victor Abola of the University of Asia and the Pacific, 2.9%; Robert Dan Roces of Security Bank, 2.8%; Makoto Tsuchiya of Oxford Economics, 2.7%; and Emilio Neri Jr. of the Bank of the Philippine Islands, 2.6%.

high base

Zhu said January inflation would reflect a high base from last year when food prices, particularly pork, soared due to supply constraints. The rate of increase in commodity prices averaged 4.5% in 2021, exceeding the target range judged by the Bangko Sentral ng Pilipinas (BSP) as manageable and supportive of economic growth, mainly due to the high cost of food in the context of the prolonged pandemic.

It was only last December that the monthly headline rate came back within the target limits, at 3.6% year-on-year.

Abola said that while this month’s Omicron surge had no significant impact on consumer prices, a big jump would be reflected in transportation inflation as “fuel costs rose above the high averages of September-October 2021”.

Global oil prices crossed the $90 per barrel mark last week.

Roces highlighted “upward pressures on food prices resulting from the impact of the typhoon, mainly in the Visayas and Mindanao regions, as well as an upward movement in the utility basket due to the rising electricity and oil costs.

Impact Omicron

“This is offset by the impact of Omicron, which may have either stabilized or exerted slight downward price movements in all other baskets, including heavy restaurants and the accommodation basket as well as the new basket personal care, as mobility returned to pre-November 2021 levels this month,” Roces said.

Using 2012 as a base, Nicholas Antonio Mapa of ING and Ruben Carlo Asuncion of Union Bank forecast 3.9% year-on-year; Han Teng Chua of DBS and Alvin Joseph Arogo of the Philippine National Bank, 3.3%; Euben Paracuelles of Nomura, 3.2%; Sanjay Mathur of ANZ, Miguel Chanco of Pantheon Macroeconomics and Patrick Ella of Sun Life Financial, 3%; Michael Ricafort of Rizal Commercial Banking Corp., 2.9%; Ser Percival Peña-Reyes of Ateneo de Manila University and Jonathan Koh of Standard Chartered, 2.8%; Jonathan Ravelas of BDO Unibank, 2.7%, and Alex Holmes of Capital Economics, 2.5%.

Goldman Sachs Economics Research forecast inflation of 3.4% in January with price levels higher this month than last month by 0.9% “due to higher fish and gasoline prices. in the internal market”. HSBC Global Research’s forecast was 3.1%.

Last week, Socio-Economic Planning Secretary Karl Kendrick Chua said the government was monitoring the global rise in food prices. INQ

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