Connect with us

Hi, what are you looking for?

Economy

Inflation to ease by H2 as transport prices stabilize — Citi

HEADLINE INFLATION is expected to ease by the second half on subsiding pressure from transport and food prices, Citigroup said.

“We expect inflation to ease in H2, due to waning effects from transport services (higher air and road transport fares from July 2020),” Citigroup, Inc. economist for the Philippines Nalin Chutchotitham said in a note Tuesday.

Inflation hit a two-year high of 4.2% in January, against the 3.5% posted in December and the year-earlier level of 2.9%.

The Bangko Sentral ng Pilipinas (BSP) raised its average inflation forecast to 4%, which is at the high end of its target range, from 3.2% previously. Citi’s forecast for inflation this year is for an average of 3.6%.

BSP officials have noted that upside pressure from the increase in prices of food and fuel will continue in the next few months, although they expect inflation to remain manageable.

For 2022, BSP estimates average inflation of 2.7%.

“Our indicator of inflation pervasiveness shows that only 20% weight of the CPI (consumer price index) basket have higher than 4% inflation. Meanwhile, other measures of inflation — core inflation, wholesale and retail price inflation — have been relatively stable,” Ms. Nalin said.

“The high unemployment should also keep wage inflation in check,” she added. In October, the jobless rate stood at 8.7%, equivalent to about 3.813 million unemployed.

Meanwhile, core inflation, which strips out volatile items like food and fuel, was 3.3% in January.

Meat and vegetable prices grew in the double digits last month, rising 17.1% and 21.2%, respectively. The government has moved to expand the minimum access volume allocation for pork imports to increase supply and imposed a 60-day price ceiling for pork and chicken products in Metro Manila.

However, the measures have been resisted by the industry, with some vendors opting out of selling pork while the price controls are in force.

Ms. Nalin said the authorities have been quicker to implement measures this time around compared to the rice price crisis in 2018.

“While upside risks remain, we think inflation expectations should be better-anchored this time around,” she said.

Ms. Nalin said the central bank’s options “are limited” and is likely to maintain policy rates until mid-2022.

Last week, the central bank kept the key policy rate at 2% and BSP officials said its stance will remain accommodative to help support the economic recovery. — Luz Wendy T. Noble

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Economy

  Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by enabling them to publish their...

Economy

Notice of Annual Stockholders’ Meeting Notice is hereby given that the Annual Stockholders Meeting will be held on Monday, June 20, 2022 at 8:30...

Economy

Ferdinand R. Marcos, Jr speaks to foreign correspondents at his headquarters in Mandaluyong City, Philippines, May 11. — REUTERS By Kyle Aristophere T. Atienza,...

Economy

FORMER Socioeconomic Planning Secretary Arsenio S. Balisacan, former Labor Secretary Bienvenido E. Laguesma and migrant workers’ rights advocate Susan “Toots” Ople have accepted presumptive...

Economy

By Revin Mikhael D. Ochave, Reporter THE Philippine economy may expand at a slower pace if it fails to become a member of the...

Economy

Containers are seen at the Manila port area. — PHILIPPINE STAR/ EDD GUMBAN VARIOUS business groups, which include shipping companies, truckers, exporters, and customs...

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Economy

Ivermectin, an existing drug against parasites including head lice, has had a checkered history when it comes to treating COVID-19. The bulk of studies...

Investing

Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered throughout...

Investing

As a traditionally rigid insurance industry becomes bogged down by antiquated processes and operations, a handful of industry leaders are seeking to shake things...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.