Inflation, or the rate of change in prices, is projected to range around the 4 percent mark in the second quarter this year, according to experts such as those from the analytics arm of the credit watcher Moody’s Investors Service.
The projection confirms the Moody’s view the headline print were to prove volatile in the near term and after having actually kicked up a second time in March to 3.7 percent from only 3.4 percent in February.
This developed so soon after inflation dipped to a three-year low of 2.8 percent in January that brought the three-month inflation rate averaging 3.3 percent.
“We expect inflation to bump around the 4 percent mark this quarter before cooling to nearer the BSP’s 2 percent to 4 percent target range. As the latest readings are within that range already, the monetary board will likely hold the policy rate at 6.5 percent” when it meets on Tuesday.
This and related other developments boost the likelihood for the existing monetary policy environment to remain in place at the moment and for those changes to begin in the third quarter, Moody’s analysts said.
Other experts have projected inflation averaging lower in the second quarter to 2.7 percent, improving further to 2.5 percent in the third and round the period with inflation averaging higher to 3.3 percent in the fourth quarter. For the entirety of 2024, the other experts projected within-target inflation averaging 3.5 percent.
Moody’s analysts have noted that demand-side pressures have crept up in latest readings, notably in the restaurants and accommodation services category which proved the second largest contributor to headline inflation to 5.6 percent in March from 5.3 percent in February.
The analysts traced the uptick in part to the gradual return of Chinese tourists proving 40 percent higher than a year earlier and on transport costs rising 2.1 percent as the various fuel retailers bumped up their pump price and as more Filipinos move about the country.
Context.ph ran a story in which flag carrier Philippine Airlines projected more or less 18 million taking to the skies this year.
From the Moody’s analysts’ perspective, transport, electricity and food could all drive inflation higher this year.
“A 5.6 percent rise in the food and alcoholic segment contributed two percentage points to the headline print. This was largely from a 17.3 percent jump in cereals and related products, a category that captures rice. As rice is both a water-thirsty crop and a staple in Filipino cuisine, El Nino landed a double-blow in terms of inflation ,” the analysts said.
The El Nino rolls around every two to seven years on average and last visited the Philippines in 2019.
