đź“·Metrobank chief economist Nicholas Antonio Mapa
Private sector economists forecast further easing inflation in August due to lower fuel and food prices despite weather disruptions on the back of a stronger Philippine peso.
A City Post poll of six economists yielded an average inflation forecast of 3.6 percent in August, within the upper end of the 3.2 to 4.0 percent month-ahead forecast of the Bangko Sentral ng Pilipinas (BSP).
If realized, August inflation would have eased from 4.4 percent in July and the 5.3 percent print a year earlier.
The Philippine Statistics Authority is set to release inflation data on September 5.
Nicholas Antonio Mapa, the chief economist at Metropolitan Bank & Trust Co. (Metrobank), expects an August inflation rate of 3.2 percent due to lower fuel, vegetable, fish and rice prices.
“Upward pressure delivered by higher beef and electricity prices. Door wide open for Bangko Sentral ng Pilipinas to cut rates further at next 2 meetings, especially after second-quarter gross domestic product print,” Mapa said in a Tweet.
Philippine National Bank (PNB) economist Alvin Arogo and Bank of the Philippine Islands (BPI) lead economist Emilio “Jun” Neri, Jr. expect a 3.6 percent inflation forecast for August as favorable base effects will outweigh the adverse impact of Tropical Depression Butchoy and Typhoon Carina on overall food prices.
“Higher transport and energy prices could be risks to the upside. Sustained deceleration in August could translate to one more (reverse repurchase [RRP])Â cut and a possible 0.5% to 1.0% reduction in the (reserve requirement ratio [RRR]) before the year ends,” Neri said in an email.
The RRR is the percentage of bank deposits and deposit substitute liabilities that banks cannot lend out and must set aside in deposits with the BSP.
RRP, on the other hand, refers to the BSP’s monetary policy instrument where the BSP sells government securities (GS) to participating entities in the RRP facility with a commitment to repurchase it at a specified future date and at a predetermined rate.
For Robert Dan Roces, chief economist at Security Bank, inflation for August may have reached 3.7 percent, driven by food basket inflation on the back of weak rice imports and heavy rainfall disruption in food production. He said these factors have likely led to sustained growth in domestic food prices, particularly rice,
“However, the overall inflationary pressure may be partially offset by a stronger Philippine peso and lower oil prices in August, which could mitigate imported inflation and reduce transportation costs,” Roces said.
In a Viber message, Rizal Commerical Banking Corp. chief economist Michael Ricafort expects August inflation to reach 3.8 percent as there could still be spillover effects on inflation by Typhoon Carina and the recent habagat to key food prices.
Ricafort noted that the food inflation could largely be offset by the reduced tariffs on imported rice since early July 2024, on top of lower world rice prices recently, stronger Philippine peso exchange rate vs. the U.S. dollar, and lower global crude oil prices. (TCSP)
