Philippines inflation easing - World Bank

World Bank sees inflation easing in Philippines

Story by Louella Desiderio

Philstar Global

05 April 2024

MANILA, Philippines — Inflation in the Philippines is expected to decline, but geopolitical conflicts that may drive up fuel prices are seen to pose risks, according to the World Bank.

Ayhan Kose, deputy chief economist of the World Bank group, told reporters that the multilateral agency expects a decline in global inflation, as well as in the Philippines.

“We are expecting inflation to continue coming down in the Philippines as well,” he said.

Inflation snapped a four-month downtrend as it quickened to 3.4 percent in February from 2.8 percent in January due to faster food and transport price increases.

Food inflation, in particular, rose to 4.8 percent in February from 3.3 percent in January due to increases in rice and meat prices.

Earlier this week, the Bangko Sentral ng Pilipinas (BSP) said it expects inflation to have continued to pick up in March to settle within the range of 3.4 to 4.2 percent.

The BSP said the continued increases in the prices of rice and meat, higher domestic oil prices and electricity rates are primary sources of upward pressures in March.

Meanwhile, lower prices of fruits, vegetables and fish along with the peso appreciation were cited as factors that could contribute to downward price pressures.

The Philippine Statistics Authority is set to report inflation data for March today.

While the World Bank expects inflation to decline, Kose said the multilateral agency has a cautious outlook on how inflation is going to evolve and how monetary policy is going to respond in the United States and other advanced economies, citing risks such as geopolitical tensions, which could affect global trade and prices.

“The elevated geopolitical tensions could disrupt commodity markets and could basically increase inflationary pressures,” he said.

He said a large part of inflation movements are driven by oil prices, especially in countries that depend on imported oil like the Philippines.

If oil prices go up due to intensified geopolitical conflicts, he said this could lead to higher inflation and delay interest rate cuts.

Gonzalo Varela, lead economist for the Philippines at the World Bank, said how the BSP would go about its rate cuts would depend on what happens with supply-side shocks and inflation expectations.

National Economic and Development Authority Secretary Arsenio Balisacan said the government is committed to keep inflation within the target range of two to four percent this year.

“We’ll work very hard to address the non-monetary measures that are contributing to that resurgence of inflation in recent months,” he said.