Philippines: Inflation jumps in August – UOB

Senior Economist at UOB Group Julia Goh and Economist Loke Siew Ting give their views on the latest inflation figures in the Philippines.

Key Takeaways

“Headline inflation rebounded substantially to 4.9% y/y in Aug after moderating for five straight months to 4.0% y/y in Jul. It marked the highest inflation rate since Dec 2018 and surpassed the central bank’s (BSP) inflation target range of 2.0%-4.0%. The reading also overshot our estimate (4.3%) and Bloomberg consensus (4.4%), primarily attributed to pricier food, transportation, and utilities amid a weaker Peso (PHP) and tighter COVID-19 pandemic curbs during the month.”

“After taking into consideration higher inflation outturn in Jul-Aug than our earlier estimates and expectations of firmer global commodity prices and persistent broad USD strength in the near term, we have tweaked our 2021 full-year inflation forecast higher to 4.5% (from 4.0% previously; 2020: 2.6%). We now see the nation’s headline inflation continuing to hover near the 5.0% level over the next couple of months before retracing to the upper bound of BSP’s target range by year-end. Meanwhile, underlying inflation remained stable at sub-3% level for the 15th consecutive month.”