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Title Inflation May Analysts say food and electricity costs continued to rise in August and rice prices were lowered.
one BusinessWorld The median estimate of the August Consumer Price Index (CPI) from a poll of 16 analysts was 1.3%, down from 0.9% in July, but slower than the 3.3% clip in August 2024.
If realized, August will have a sixth straight month of inflation below Bangladesh ng pilipinas’ (BSP) Target range is 2-4%.
Philippine Statistics Bureau is scheduled to release in August Inflation data for Friday, September 5.
BSP predicts inflation has settled within the 1% to 1.8% range in August.
“The upward pressure for the month is likely due to higher costs for fruits, vegetables and fish due to adverse weather conditions,” BSP said in a statement late Friday. “The higher power rates, higher domestic fuel costs and a depreciation of the peso are also causing upward pressure.”
However, these could be offset by the low prices of rice and meat, BSP said.
Metropolitan Bank & Trust Co. (Metrobank) said inflation could gain 1.3% from its nearly six-year low in July due to “due to disruptive weather and higher energy costs.”
It noted that fish and vegetable prices rose after typhoons in late July and early August as supply was disrupted. However, the prices of meat and fruits have risen year by year, but at a slower pace.
According to the Ministry of Agriculture, Dante and Emon, as well as the southwestern monsoon, brought heavy rain and flooding from late July to early August, causing agricultural losses worth 4.86 billion pesos.
Energy Cost
Price pressure also comes from higher power rates and Pump prices in August.
“Among the factors of upward inflation pressure, higher electricity rates and higher oil prices due to bad weather, higher prices for fish, fruits and vegetables,” Angelo B. Taningco, head of research and chief Economists at the Security Bank said.
Metrobank noted that the country’s three major power players – Meralco, Visayan Electric Co. and Davao Light and Power Co. – raised interest rates in August due to higher electricity. Supply costs and transmission costs.
Meralco raised the tax rate of P0.6268 per kilowatt-hour in August, bringing the total ratio of typical households to P13.2703 per kilowatt-hour. This means an additional P125 in the total electricity bill for residential customers who consume 200 kWh.
Chinabank Research noted that domestic pump prices adjusted upward in August.
“However, these could be alleviated by the month-on-month declines in rice, meat and LPG (LPG),” Chinabank said.
As of August 26, the price of gasoline pumps was adjusted to P0.70 per liter, the net increase of kerosene to P0.50, and the net increase of P0.30 for diesel to P0.50.
However, Jonathan L. Ravelas, senior consultant for Reyes Tacandong & Co., said the August prints were still “soft” because rice prices remained low and consumer demand was not getting much collection.
Rice price
Rizal Commercial Banking Corporation Chief Economist Michael L. RicaLow-priced rice can help keep inflation under BSP’s target, Boe said.
“Inflation may remain relatively good and remains below the BSP’s inflation target of 2%-4% (close to the lower end of the above range), which is mainly due to the lower rice prices, accounting for 9% of the CPI basket, as tariffs on imported rice have been lowered since early July 2024,” he said.
But Ruben Carlo O. Asuncion, chief economist at United Bank of the Philippines, said rising risks of inflation include rising PALAY prices in some regions before the government bans rice imports and potential supply disruptions for 60 days.
“The downside is that the basic effects of La Nina and the ongoing rice deflation last year may reduce inflation,” he said.
Rice inflation has been slowing over the past few months, including lowering tariffs on rice, amid government measures to curb rising staple food prices.
The 60-day suspension of rice imports begins today (September 1) and will end on October 30. It covers imports of conventional milling and frosted rice, but does not include species Usually not produced locally.
Mayan economist Azril Rosli said the impact of Mr Marcos’ rice import ban could begin in the fourth quarter.
“We expect that the immediate pass effect on consumer prices will remain limited from the end of the third quarter to the fourth quarter 2025 quarter. ” he said.
“We expect that with policy implementation fully in effect and market adjustments, we expect this supply-side intervention to have a greater impact, especially from the fourth quarter of 2025 to the beginning of 2026.”
Lower international rice prices may help keep food prices back in August, said Arindam Chakraborty, an economist at ANZ Research.
“Looking forward, a potential reversal of rice import tariffs could put up pressure on food prices,” Mr Chakraborty said. “Even so, given the moderate demand conditions, we expect inflation to remain below BSP.”ficial target scope for 2025.
Meanwhile, Mr Yasen said recent wage hikes and weak peso were the drivers of inflation in August.
“The slight increase from 0.9% in July is caused by high energy prices, wage adjustments and emerging passes of imported goods, especially in the case of weaker peso,” he said.
The Philippines’ Bankers Association showed that the local department closed at the end of P58.32 on Friday at the end of P1.19 at P57.13.
Euben Paracuelles, a research analyst at Nomura Global Market Research, noted that core inflation in August may remain the same. Core inflation is slightly received 2.3% in July were from 2.2% in June.
“However, core inflation is likely to remain unchanged from last month, which is consistent with the conditions for stable demand and the still negative output gap,” he said.
Reduce impact rate
Analysts expect the impact of the Monetary Commission’s latest policy interest rate on lower inflation rates in the coming months will be “silenced”.
“The direct impact of this rate on real inflation is expected to be muted,” Yasen said. “As demand-side pressure remains soft and supply-side factors such as deflation of rice and weak producer prices in China continue to dominate, cuts are unlikely to trigger a sharp rebound in prices in the near term.”
At the meeting on August 28, the central bank delivered for the third consecutive time 25 basic points (BP) cutting, bringing Its policy interest rate is 5%. BSP Governor Eli M. Remolona, Jr. It also said that according to the data, they could cut another $2.5 billion this year.
Mr Rosley said the cuts to cut 25 TDs “could create moderate inflationary pressure”.
“Lower borrowing costs should stimulate consumer credit demand, especially for durable goods and housing-related spending, putting upward pressure on inflation,” he said. “However, given the momentum of economic stability, this demand-side stimulus is expected to be measured rather than obvious.”
Mr. Ravelas said the price cut was a “calculated push” that could support the country’s growth without causing inflation.
He added: “If demand starts to recover, we may see inflation rising, but for now, it is an effort to keep the economy going.”
Oikonomia Advisory & Research, Inc. Reinielle Matt M. Erece, an economist, said that as consumer demand increases, lower rates may increase inflation.
“The slowdown, and the start of the holiday, may inspire higher demand for goods and services,” Ellis said. “This could lead to higher inflation as commodity spending could drive prices.”
The central bank said it will continue to monitor factors that may affect its inflation and growth prospects after its data-driven approach to monetary policy decisions.
The next policy-making meeting for BSP is October and December.
