Inflation ‘still elevated’ in February, but month-on-month improvement seen — BSP

Inflation is expected to remain elevated this month, which could clock in at a fresh 14-year high, amid lingering supply constraints on some food items and higher utility costs, a top official of the Bangko Sentral ng Pilipinas (BSP) said Tuesday.

BSP Senior Assistant Governor for the Monetary Policy Sub-sector Iluminada Sicat told reporters on the sidelines of the Manila Times Economic Forum in Makati City that the February inflation print is forecast to be “still elevated.”

In its February forecast, the central bank said inflation is expected to settle between 8.5% and 9.3%.

The Philippines saw an inflation - the rate of increase in the prices of goods and services - of 8.7% in January, an acceleration which surprised economic managers.

It was the fastest inflation print since the 9.1% recorded in November 2008.

The central bank said that upward price pressures in February are expected to emanate from higher liquefied petroleum gas (LPG) prices as well as elevated prices of key food items such as pork, fish, eggs, and sugar.

The peso’s appreciation and lower petroleum prices, as well as fruits, vegetables, chicken, and beef prices, "contribute to easing price pressures during the month," it said.

Sicat, however, said that there is an expected improvement in inflation on a month-on-month basis.

“The [inflation] rate in January was very high already… looking at the base, there is an improvement month-on-month because January was already high,” Sicat said.

“Without me saying what the number is, we can predict that it’s going to be slower than what we had in January versus December,” she added.

Amid the still high inflation trend, the government is preparing to launch another round of cash aid under the Targeted Cash Transfer (TCT) program to help ease consumers’ burden. 

Under the proposed cash aid program, some 9.3 million “poorest of the poor” will receive P1,000 which will be divided for distribution for two months.

Meanwhile, Sicat said the BSP will “make use of all available tools in order to stabilize and bring back the inflation trend back to the target range.”

“The BSP will continue to adjust its monetary policy stance as necessary to prevent the further broadening of price pressures as well as the emergence of additional second order effects. The BSP will also continue to closely monitor emerging price developments in accordance with the BSP’s price stability mandate,” the central bank said.

The government is targeting inflation to settle within the ceiling of 2% to 4% this year.

The Philippine Statistics Authority is scheduled to release the official inflation figures for February on March 7, 2023. — RSJ/VBL, GMA Integrated News