Analysts expect inflation to have steadied in February

Inflation likely remained steady in February as energy prices stabilized despite higher food costs, but is set to creep up in the months ahead, analysts said. A survey of nine economists and bankers showed an average inflation forecast of 4.3 percent for the month, the same as January’s and within the central bank’s projected range of 3.4-4.5 percent. Francisco G. Trinidad, Jr., Citigroup economist for the Philippines, said higher food costs have been offset by stable oil prices. "[But] it’s a temporary lull… It won’t remain in that range if the global recovery persists," he said. "A slower monthly estimate doesn’t assure that we won’t be seeing elevated inflation in the succeeding months," he added. ING Bank economist Jose Mario I. Cuyegkeng agreed that February inflation had likely stayed steady, but added that higher demand for commodities from a rebounding Asia would put pressure on prices. "We are okay on rice because the government has addressed some of the problems [by importing], but what we need to find out is how other commodities are moving, especially since Asian growth has been robust and that’s attracting more demand for these items," he said. Marcelo E. Ayes, Rizal Commercial Banking Corp.senior vice-president for financial markets, said: "The signal is mixed from the emerging markets. Only Asia’s growth is solid. The others are only tentative so demand cannot be sustained yet." The Bangko Sentral ng Pilipinas last month said inflation would be driven by higher food prices due to the end of harvest season and expectations that a dry spell would affect supply. The central bank’s inflation target for the year is 3.5–5.5 percent. Monetary authorities have said the pace of price increases would likely pick up in the second and third quarters, but is unlikely to breach the high end of the target. — Don Gil K. Carreon, BusinessWorld