The slight slowdown of February inflation to 8.6 percent a 14-year high of 8.7 percent in January may not be enough to convince the Bangko Sentral ng Pilipinas to abandon its hawkish stance, which favors monetary tightening, in the succeeding policy meetings, a unit of Moody’s Corp. said Monday.
Inflation averaged 8.6 percent in the first two months, above the target range of 2 percent to 4 percent.
“Despite the slight easing of the headline figure, core inflation, which excludes selected food and energy items, rose to 7.8 percent from 7.4 percent in January,” Moody’s Analytics said in a report.
“Inflation in the Philippines is uncomfortably strong and has likely not yet peaked; the odds are high that the country’s monetary policy tightening cycle is not over,” it said.
National statistician and civil registrar general Dennis Mapa said earlier that among the 13 commodity groups, transport was the sole driver of the downtrend of the overall inflation in February.
Nine commodity groups showed higher inflation rates which included food and non-alcoholic beverages at 10.8 percent; alcoholic beverages and tobacco, 11.0 percent; clothing and footwear, 4.8 percent; furnishings, household equipment and routine household maintenance, 6.2 percent; health, 4.0 percent; information and communication, 0.8 percent; recreation, sport and culture, 4.4 percent; restaurants and accommodation services, 8.1 percent; and personal care, and miscellaneous goods and services, 5.3 percent.
Moody’s Analytics earlier said the Bangko Sentral would be aggressive in tackling inflation early in 2023, adding that monetary policy tightening cycle “will run for longer in the Philippines than elsewhere in Asia given stubbornly elevated inflation.”
BSP Governor Felipe Medalla said in a previous interview monetary authorities were ready to act accordingly if inflation in February would remain high.
“We are still hawkish… If the February inflation is bad we will act… but we are hawkish for a reason…It is the data,” Medalla said.
“The most likely scenario is maybe one more [hike]… But if I see a negative month on month [inflation], I may change my mind… We are hoping that non-monetary measures will reduce inflation,” he said.