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Philippines Inflation February 2023

Philippines: Inflation falls marginally in February

Inflation eased slightly to 8.6% in February from January’s 8.7%. Looking at the details of the release, softer price growth for transport outweighed stronger price pressures for food and non-alcoholic beverages, housing and utilities, and clothing and footwear. Food prices remained affected by tropical storms that devastated supply chains, with government intervention not fully offsetting the disruptions. Additionally, stronger price growth in discretionary spending categories—such as recreation and textiles—points to still-robust demand, which suggests inflation might remain sticky.

Moreover, annual average inflation remained on an uptrend, rising to 6.8% in February (January: 6.3%).

Finally, consumer prices rose a seasonally adjusted 0.34% from the previous month in February, coming in below the 1.03% rise logged in January.

Looking ahead, a high base effect, cooling commodity prices and tight financing conditions should bring down headline inflation. Sustained spikes in food costs, robust domestic demand and the Central Bank’s dovish stance favoring economic growth over firmer price controls pose upside risks.

Analysts at the EIU added:

“We remain of the view that bringing down inflation is still the biggest challenge facing policymakers in 2023. […] We continue to expect a further 50 basis points of rate increases shortly, after which the [Central Bank] will attempt to pause. However, there is a significant risk that inflation will prove stubborn and will require further rate increases later this year.”

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