Philippines: Inflation accelerates further under rebased index
March 6, 2018
In February, consumer prices increased 0.8% compared to the previous month, slightly below January’s 0.9% month-on-month rise. The rise was again largely driven by higher prices for alcoholic beverages and tobacco, and for non-alcoholic beverages. Prices for these products rose as a consequence of the entry into force in 2018 of the Tax Reform for Acceleration and Inclusion (TRAIN), which hiked excise taxes on a number of products.
This is the first month in which the Central Bank of the Philippines provided two different definitions of inflation, one using the 2006-based CPI series and the other one using a new 2012-based series. As for the first definition, inflation came in at 4.5% in February, accelerating considerably from January’s 4.0% and marking the highest reading since November 2011.
Using the new 2012-based series, inflation came in at 3.9% in February, above January’s 3.4% and the strongest print since September 2014. As a result, inflation remained just below the upper bound of the Central Bank’s target range for the 2017–2020 period, set at 3.0% plus or minus one percentage point. Meanwhile, annual average inflation remained stable at January’s 3.0%.
Core consumer prices, which exclude volatile items such as foodstuffs and oil, rose 0.8% over the previous month in February, down from January’s 1.0% increase. Finally, core inflation came in at 4.4% in February, a notable acceleration from January’s 3.9%, marking the highest reading since November 2011.
Philippines Inflation Forecast
FocusEconomics Consensus Forecast panelists expect inflation to average 3.5% in 2018, which is unchanged from last month’s projection. For 2019, panelists see inflation of 3.4%.