Economists believe inflation in February quickened within the range of 3 percent to 3.3 percent due to high electricity, food and fuel prices.

This forecast is higher than January’s 2.8 percent recorded by the Philippine Statistics Authority. However, it is within the 2 to 4 percent target range of the Bangko Sentral ng Pilipinas.

Economists from the research group of China Banking Corporation or Chinabank saw last month’s inflation at 3.3 percent due to elevated power rates from Meralco, the country’s top power distributor.

Upward pressures

“We observed higher electricity rates in Meralco-serviced areas and in some parts of Visayas and Mindanao. These upward pressures likely offset price reversals in vegetables, fruits, and sugar,” they said in an email to the Daily Tribune.

Dan Roces, chief economist of Security Bank, estimates the latest inflation settled at 3.2 percent, partly due to high food prices caused by El Niño.

“We attribute this estimate to continued price hikes in essential food items like rice, meat and fish,” he said.

Food a major inflation driver

Food items are a major inflation driver, accounting for over 9 percent of all items in the consumer price index, data from the statistics authority show.

Ruben Asuncion, chief economist of Union Bank of the Philippines, said growth in food prices might breach 6 percent this year compared to the last as drought reaches its peak in the first half of 2023.

He added food inflation could ease to 4.7 percent starting August as food supply increases, resulting in slower overall inflation.

Asuncion also expects the average fuel price to remain elevated at 1.6 percent growth.

Given these factors, he estimates February inflation settled at 3.1 percent.

Meanwhile, Michael Ricafort, chief economist of Rizal Commercial Banking Corporation or RCBC, projects a softer inflation at 3 percent as he said global crude prices have remained low over two years.

“This is so provided there is no escalation of geopolitical risks particularly on the Israel-Hamas war and the potential effects on world oil prices. Also, provided no large storm or El Niño drought damage,” he said.

“Supply-side inflation factors would be better addressed by non-monetary measures and lower tariffs (though temporarily) on pork, rice and other agricultural products,” Ricafort added.