Poll: Inflation likely picked up in Feb.

By Katherine K. Chan, Reporter 

PHILIPPINE INFLATION may have hit its fastest pace in over a year as price pressures from higher costs of electricity, oil and rice pushed up the headline print in February, analysts said.

The consumer price index (CPI) likely settled at 2.4% in February, the fastest clip in 13 months or since the 2.9% in January 2025, based on a median forecast of 17 analysts polled by BusinessWorld.

If realized, the latest headline inflation would also be faster than the 2% recorded in January and the 2.1% in February 2025.

“February inflation risks were less about a shock and more about persistent cost pressure, with oil quietly amplifying the print. (I) am looking at February (inflation) at 2.4%,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said in a Viber message.

This means February could mark the second month in a row that inflation hit the Bangko Sentral ng Pilipinas’ (BSP) 2%-4% target, with the median estimate likewise falling within the central bank’s 2.3%-3.1% forecast for the month.

The Philippine Statistics Authority (PSA) will release the February inflation data on Thursday, March 5.

China Banking Corp. Chief Economist Domini S. Velasquez likewise attributed the potential inflation uptick to recent price hikes in fuel, liquefied petroleum gas (LPG) and electricity.

“The uptick was driven by continued month-on-month gains in the prices of rice and fish, along with higher energy costs,” Ms. Velasquez said in an e-mail. “Domestic pump prices have now increased for seven straight weeks, while LPG costs and electricity rates in Meralco-serviced areas were also higher compared with January.”

Pump price adjustments in February stood at a net increase of P3.20 a liter for gasoline, P4.40 a liter for diesel and P3.50 a liter for kerosene.   

National Statistician Claire Dennis S. Mapa said last week that he sees oil prices adding pressure to February inflation, citing the consistent weekly increases in oil prices.    

LPG prices were also higher last month, with the majority of oil companies in the country implementing a P1.50- to P1.55-per-kilogram (kg) increase.

This brought the price of a household-standard 11-kg LPG tank to between P836.50 and P1,137.05 last month, based on data from the Department of Energy.   

Meanwhile, Manila Electric Co. (Meralco) hiked electricity rates in February amid higher transmission charges after two straight months of reductions.

It raised the rate by 22.26 centavos per kilowatt-hour (kWh) to P13.1734 per kWh last month from P12.9508 per kWh in January, translating to an additional P45 in the monthly electricity bill of households consuming an average of 200 kWh.

COSTLIER RICE
Meanwhile, analysts noted that rice deflation likely slowed in February as retail price of rice continued to pick up on a monthly basis, which may have also fueled the headline print.   

“The uptick reflects a low base effect as last year’s declaration of a food security emergency on rice, which authorized the release of buffer stocks at subsidized prices, dampened price pressures,” Moody’s Analytics Assistant Director and Economist Sarah Tan said in an e-mail. “As a result, declines in rice prices over the past few months will lose momentum.”

Aris D. Dacanay, ASEAN economist at HSBC Global Investment Research, also noted that the cost of the staple grain has climbed by 3%-4% month on month since January “with supply conditions tight.”

Data from the PSA showed that the average price of local regular milled rice fell by 2.5% to P46.01 per kilo in the second half of February from P47.19 per kilo a year ago but inched up by 5.14% from P43.76 in January.

Well-milled rice was also 0.7% cheaper year on year at P53.54 per kilo from P53.90 but climbed by 5.04% from P50.97 in January. On the other hand, the cost of special rice edged down by an annual 1.22% to P61.55 per kilo from P62.31 but went up by 2.57% month on month from P60.01.

In January, the Department of Agriculture said that the levy on imported rice will remain at 15% until March, but noted that they could bring the rate up to 20% if the benchmark price of the staple grain slides to $367 per metric ton.

Mr. Dacanay also noted that core inflation may have also picked up further in February.

“With food components having a heavy weight in the Filipino consumer basket, the inflationary pressures in headline inflation may have also spilled over to core CPI,” he said.

Core inflation, which excludes volatile prices of food and fuel, was at its fastest in one-and-a-half years at 2.8% in January.   

RISKS TO BSP EASING
Inflation could continue to quicken in the coming months, a trend that could weigh on the BSP’s policy path going forward, analysts noted.

“Uptick in inflation is expected to continue in coming months which could mean the window for BSP to consider easing again remains open for only a little longer,” Metropolitan Bank & Trust Co. Chief Economist Nicholas Antonio T. Mapa said in a Viber message.

Last month, the central bank trimmed the key interest rate by 25 basis points (bps) for a sixth straight meeting to an over three-year low of 4.25% as it sought to regain lost confidence amid the flood control corruption scandal.

The Monetary Board has now delivered a total of 225-bp reductions since it began easing in August 2024.

BSP Governor Eli M. Remolona, Jr. said the policy path ahead is now less certain as they see “tentative” signs of recovering confidence, while also noting that further monetary policy easing may not be enough to boost the sluggish economy. 

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said they are also reconsidering their outlook for one more rate within the year as they see inflation potentially breaching the central bank’s target band by April.   

In a Viber message, he said the February print could come in at 3%, which “if realized, headline inflation could approach or breach 4% as early as April, largely contingent on the rice demand-supply dynamics in the coming months, which we continue to monitor closely.”

The BSP now expects inflation to settle at 3.6% by yearend, faster than its initially expected average of 3.2%.

If the BusinessWorld poll’s February inflation estimate materializes, it would bring the two-month average to 2.2%.

Mr. Remolona earlier said that he is more worried about inflation exceeding their 3% target than it falling below 2%.

BSP Deputy Governor Zeno Ronald R. Abenoja has said headline inflation could breach the 3% mark by the second half of the year before stabilizing around the midpoint of the target band, with electricity rate adjustments, costlier oil and the impact of the government’s flexible rice tariff scheme on local rice prices likely to bring “temporary” inflationary pressures.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., also said inflation might approach 3% in the coming months due to rising global oil prices amid ongoing global geopolitical tensions.

“For the coming months, higher global crude oil prices, (which was) among five-month highs recently, and also higher prices of some industrial metals and other global commodity prices amid the recent geopolitical risks in Iran, Venezuela, Greenland, among others, could lead to some pick up in importations costs and in overall inflation,” he said in a Viber message.

The Monetary Board is set to hold its second policy meeting this year on April 23.