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Philippines Inflation February 2024

Philippines: Inflation comes in at highest level since December 2023 in February

Inflation rose to 3.4% in February, above January’s 2.8% but still within the Bangko Sentral Pilipinas’ target of 2.0–4.0%. February’s result marked the highest inflation rate since December 2023. The figure was primarily driven by rising prices for food and non-alcoholic beverages, in particular rice prices which were up 20% year on year on tight supply. In addition, price pressures for housing and utilities increased at a stronger rate.

The trend pointed down, with annual average inflation coming in at 5.1% in February (January: 5.5%).

Lastly, consumer prices rose a seasonally adjusted 0.93% over the previous month in February, swinging from January’s 0.14% fall. February’s result was the highest reading since September 2023.

In the coming quarters, inflation is forecast to rise further from current levels before ebbing again by year-end. Elevated food prices due to the El Niño weather event and export restrictions, coupled with geopolitical uncertainty stoking shipping costs globally, will continue to stoke domestic price pressures. A stronger peso later in the year should support disinflation, however.

United Overseas Bank analysts Julia Goh and Loke Siew Ting commented on the inflationary outlook:

“With the faster-than-expected reflation in February, there is an increasing possibility that headline inflation will accelerate above the BSP’s 2.0%-4.0% medium-term target between April and July, before retreating back to the target range from 3Q24 onwards. While awaiting for more affirmation and further developments relating to global commodity prices and supplies, we maintain our 2024 full-year inflation forecast at 3.5% (BSP est: 3.6%, 2023: 6.0%) for now. Our projection has also taken into consideration the continued non-monetary intervention measures by the government.”

ING analyst Nicholas Mapa commented on the monetary policy outlook:

“The recent move higher for inflation means the Bangko Sentral ng Pilipinas (BSP) will extend its pause. BSP Governor Remolona has been telegraphing an eventual rate cut towards the latter half of the year, likely waiting for inflation to show “convincing” signs of staying well within target. […] If inflation manages to stay relatively subdued and the Fed finally starts to ease, we expect the BSP to likewise begin its easing cycle to give economic growth added support in the face of challenging global headwinds.”

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