Inflation was likely to have further slowed down in May as many consumers limited purchases to essentials during an extended lockdown to prevent coronavirus transmission, according to most economists asked by Inquirer.
Seven of 16 economists and financial institutions projected May’s rate of increase in prices of basic commodities to be below April’s four-month low of 2.2 percent.
The Philippine Statistics Authority (PSA) will release the May inflation figure on Friday (June 5).
Nomura’s Euben Paracuelles and Oxford Economics’ Thatchinamoorthy Krshnan had the same forecast of 1.8 percent, lowest year-on-year.
Krshnan attributed this to lower fuel prices and slower economic activity although demand picked up for food and pushed prices up slightly.
Banco De Oro (BDO) Unibank’s Jonathan L. Ravelas, Barclays’ Angela Hsieh, Maybank’s Suhaimi Bin Ilias and Zamros Bin Dzulkafli, and Sun Life Financial’s Patrick M. Ella projected 2 percent.
“The small uptick in food and fuel prices may be offset by lower electricity as well as services costs,” said Hsieh.
HSBC’s forecast was 2.1 percent.
Three economists—Ateneo de Manila University’s Alvin P. Ang, Capital Economics’ Alex Holmes, and Rizal Commercial Banking Corp.’s (RCBC) Michael L. Ricafort—expect headline inflation last May to be the same as the 2.2-percent rate in April.
Holmes said “rice prices rose further, [which] should offset falling prices elsewhere as subdued demand weighs on core price pressures.”
“Easing of lockdowns could also somewhat help ease constraints in logistics and disruptions in supply chains,” said Ricafort. These, he said, “could help ease prices of some products especially food and other basic necessities.”
Some parts of the country with lower COVID-19 cases were placed under modified enhanced community quarantine (MECQ) since mid-May.
Five economists had forecasts above 2.2 percent—2.3 percent for Security Bank’s Robert Dan J. Roces as well as University of Asia and the Pacific’s Victor A. Abola and 2.4 percent for Bank of the Philippine Islands’ (BPI) Emilio S. Neri Jr., ING Bank Philippines’ Nicholas Antonio T. Mapa, and UnionBank of the Philippines’ Ruben Carlo O. Asuncion.
For Citi Philippines’ Nalin Chutchotitham, full-year 2020 inflation will likely settle at 2.3 percent—below the 2019 average of 2.5 percent—“given low energy prices.”
Edited by TSB
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