July inflation likely to remain at 6.1% – Analysts

Analysts surveyed by the “Manila Times” estimated a survey by the “Manila Times” that a combination of upward and downward price pressures is likely to keep the Philippines’ headline inflation at 6.1 percent in July this year.

Citing price hikes, a weak peso, higher food prices and lower fuel and energy prices, economists from Union Bank of the Philippines (UnionBank), HSBC and Rizal Commercial Banking Corp. said. (RCBC), DBS, University of Asia and the Pacific (UA&P), and Security Bank Corp. and Standard Chartered Bank and China Banking Corp. It provided forecasts with a range of 5.8 to 6.6 percent for the increase in consumer prices last month.

The median forecast of 6.1 percent was up from the 3.7 percent rate a year earlier, but matches 6.1 percent in June, the fastest in more than three years.

Additionally, it compares to the Bangko Sentral ng Pilipinas’ estimated range of 5.6 to 6.4 percent for the month. On August 5, the government will officially release inflation figures for July.

The fastest forecast for consumer price growth for July came from Ruben Carlo Asuncion, chief economist at UnionBank, of 6.6 percent.

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HSBC analysts said headline inflation is expected to rise to 6.4 per cent due to stronger second-round effects. For example, they mentioned P2 – a 22 percent rise – the minimum pocket fare hike that became effective July 1 nationwide.

Analysts emphasized that it was also possible that companies raised their prices in response to the minimum wage increases in mid-June.

The rapid depreciation of the peso relative to the US dollar may have contributed to the rise in inflation by raising the cost of imports. They added that the local currency lost 6.5 percent of its value against the dollar between July 10 and 18.

“Although domestic fuel prices have fallen significantly (16.3 per cent lower compared to June 30 retail prices) with the decline in global oil prices, the decline may not be enough to slow inflation on an annual basis. But it may be enough to calm inflation on a monthly basis.” .

Michael Ricafort, chief economist at RCBC, forecast consumer prices to reach 6.1 percent, citing the effects of delayed wage hikes, increases in transportation costs, and other hikes in prices for other economically affected goods and services. He also said some companies are reeling or delaying price increases due to competition.

“Rising prices of other basic commodities, such as sugar and other food products, due to the delayed/delayed effects of higher global commodity prices in recent months…as well as higher domestic wages and transportation, could lead to some recovery in headline inflation amid continued transitory effects for consumers and the general public. people,” added Rycafort.

Han Ting Chua, an economist at DBS, offered the same estimate.

UA&P economist Victor Apolla forecast July inflation to be 6 percent.

Robert Dan Roses, an economist and vice president of Security Bank Corp., estimated that consumer price growth will accelerate to 6 percent, with the food basket contributing about 2.3 percent, and utilities and transportation at 1.2 percent and 1.5 percent, respectively.

He said that the inflation rate may reach about 5.8 percent in the second half of this year. Price growth continues to be driven mainly by cost-push with emerging demand-side threats.

“The recent off-cycle rally by the central bank will help ease inflationary pressure domestically, although upside risks from global factors remain significant,” Roses added.

Jonathan Koh, economist for Asia and the Philippines at Standard Chartered Bank, expects consumer price growth from 5.8 to 5.9 percent in July.

“The reason the inflation number decreased slightly in July is really because of the lower electricity prices, as well as the lower energy prices in July itself,” he said.

It issued the lowest forecast of 5.8 percent, Domini Velazquez, chief economist at China Banking Corp., said, citing lower oil and electricity prices in areas served by Manila Electric (Miralco) and some food prices, including meat and food. Fish, as compensating factors for the increase in national transportation costs over a month.

It further said the adverse baseline effects from July last year, which will run through August, also contributed to inflation in July.

The central bank said earlier that it expects inflation to stabilize in July in the range of 5.6 to 6.4 percent, driven by the continued rise in food prices, additional increases in transportation costs and the depreciation of the peso.

“In the meantime, lower oil prices, lower electricity prices in Meralco-served areas, and lower pork prices are likely to partially relieve price pressures,” he explained.

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