go through Luisa Maria Jacinta C. Josen, Senior Reporter
Title Inflation May Analysts said it fell to a six-year low in July due to higher prices of food and fuel.
one BusinessWorld Within 0.5% of the central bank, a poll of 17 analysts showed a median estimate of the July Consumer Price Index at 1.2%.TO-1.3% forecast.
Prints in July will be slower than 1.4% in June and 4.4% a year ago.
If achieved, it would be the slowest inflation in nearly six years, or since the 0.6% print release in October 2019.
The Philippine Bureau of Statistics plans to release July inflation data on Tuesday (August 5).
“For inflation in July, my forecast is 1.2%, and drivers continue to be gentle food prices and silent non-food prices, especially on energy, despite recent price adjustments for some pumps.”
In July, the price adjustment for gasoline was net decrease by 1.10 liters of p1.10, while the price of kerosene was adjusted to 1.10 liters. On the other hand, the net increase of diesel to P1.20.
Miguel Chanco, chief emerging Asian economist at Pantheon macroeconomics, said it fell directly as food inflation is increasingly lowered to red. ”
“While the impact of lower rice tariffs takes effect in late June 2024, food and energy prices may remain soft,” said Denise Cheok, an analytical economist at Moody’s.
Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., said July could target inflation for the fifth consecutive month as Rice’s inflation continues this year.
Rice inflation has been falling over the past few months as the government has taken several measures to tame the prices of staple grains. These include tariffs on rice imports, declaring food security emergencies for commodities, and reducing the maximum suggested retail price (MSRP) of imported rice.
In June, rice inflation slowed for the sixth straight month, setting a record 14.3%, the biggest decline since 1995.
“In addition, the high base effect (given that inflation peaked at 4.4% in July 2024) will help maintain year-over-year figures despite monthly increases.” Emilio S. Neri, chief economist of the Small Islands. explain.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., also noted the first anniversary of the tariff on rice imports, which dropped from 35% to 15% in July 2024.
“Basic impact may play a major role, but retail prices are still manageable,” said economists at HSBC.
“The higher prices of rice, fruit and LPG may also lead to this slowdown, although these prices may be alleviated by other key foods such as fuel, electricity and other key foods such as vegetables, meat, fish, eggs and cooking oil,” Chinabank Research said.
Analysts also pointed to the upward risk of inflation printing this month.
“The rise is driven primarily by higher oil prices, electricity prices and choice of foods such as vegetables, fish and meat,” Mr Neri said.
The P0.4883 per kilowatt-hour (kWh) rose in July, bringing the overall interest rate for a typical household from P12.6435 per kilowatt-hour a month ago to P12.6435 per kilowatt-hour.
“However, the electricity rate and the price of diesel are upward pressure, but we don’t think these pressures are enough to offset the deflationary pressures of rice and gas,” Dakani said.
Bad weather
Meanwhile, some analysts surveyed expect inflation will accelerate from a month ago as bad weather destroys economic activity in key areas.
“The growth trends caused by the lagging effects of food and transportation costs, weather-related supply disruptions and the lagging effects of seasonal demand,” said Ruben Carlo O. Ruben Carlo O. Ruben Carlo O. Ruben Carlo O., chief economist at United Bank of the Philippines.
The latest data from the Ministry of Agriculture shows that the damage to the agricultural sector by three consecutive tropical storms has climbed to pesos.
“Recent typhoons and severe weather may also affect domestic supply chains, especially food, which could lead to price increases,” added Reinielle Matt M. Erece, an economist at Oikonomia Advisory & Research, Inc.
Mr Arsen also pointed out that exchange rate changes have affected import prices.
The Peso fell to P58.32 against the Green Guard at the end of p56.33 in June. The peso ended in late July, which is its weakest in nearly six months or since the completion of P58.34 on February 4.
Further relaxation?
Analysts say that as inflation remains below the 2-4% target, Bangkok Sentral NG Pilipinas (BSP) has plenty of room to continue the downgrade cycle.
“Inflation remains below the target and is expected to maintain the target range within the policy scope, thus providing BSP with enough room to lower interest rates and support to regulate growth momentum,” Mr Mapa said.
Chinabank Research expects central banks to cut another $2.5 billion at their meeting later this month.
“Average inflation is expected to remain below target this year’s average inflation rate is expected to remain below target at its lowest level since October 2019, and we believe that BSP lowered the tax rate by A$2.5 billion at its August meeting and could continue to relax monetary policy,” it said.
The next meeting of the Monetary Commission is August 28.
“We are currently looking for a 25-tax tax rate lower than BSP this month, as the window for relaxation from the fourth quarter may shrink, while title inflation rebounds to a level of 3% and even higher in 2026,” Mr Neri said.
BSP Governor Eli M. Remolona, Jr. It said that in policy reviews later this month, lowering tax rates are still on the desktop.
“At the next meeting, BSP may continue to cut policy. This is because inflation continues to fall below the 2% target, while GDP growth is still expected to be below the ideal 6% or faster,” Mr Erece said.
Chinabank said that the exceeding expectations for the second quarter GDP printing could further strengthen cutting conditions.
Meanwhile, Angelo B. Taningco, vice president and head of research at Security Bank, said BSP is likely to hold rates this month.
“We still expect further monetary easing, but may not be immediately enjoyed due to the possible losses due to recent and expected peso depreciation,” he said.
Analysts say central banks may also remain cautious.
“After the subsequent cuts in August, subsequent moves are expected to be measured even more, and our internal view will be further reduced in the fourth quarter as the likelihood is reduced,” Mr Neri said.
He cited inflation risks, which are the Fed’s long hawkish stance and a large current account deficit, which could limit the flexibility of BSPs in adjusting monetary policy.
“It may be necessary to pause in the fourth quarter to help cope with the pressure on local currencies,” Mr Neri added.
Mr Ella said the fourth quarter was possible: “It would be surprising if the growth would be Due to the impact of global tariffs. ”
Ms Cheok added: “BSP will closely monitor potential inflationary pressures arising from geopolitical tensions and tariff-related supply chain disruptions.”
Mr Chanco hopes the Monetary Commission cuts at least twice by the end of the year.
Mr Remolona earlier said he would continue his prospects to lower twice this year. After August, the Monetary Commission held the remaining two meetings, which were scheduled for October and December.
“Going forward, inflation may start to climb steadily as the basic impact of lower rice prices fades out,” Dakani said.
“Nevertheless, as inflation remains within the low end of the BSP target band, BSP can continue its slow cycle and perhaps deepen the cycle further in the last five months of the year.”
