June 2008 Inflation Forecast
MBC Research expects 10.5% to 11.0% inflation in June

3 July 2008 – MBC Research expects the headline inflation rate in June could have risen to more than a 9-year high of 10.5%, or even a 14-year high of 11.0%, from the 9.6% recorded in May. Rising fuel prices, food price increases especially after Typhoon Frank visited the country, the opening of the school year, and hikes in jeepney and bus fares raised the year-on-year movement of the consumer price index for the eighth consecutive month. The continued weakening of the Philippine peso against the US greenback also put pressure on headline inflation.

The Bangko Sentral ng Pilipinas earlier forecast June inflation at a range of 10.4% to 11.2%, while private-sector expectations were lower at an average of 10.2%. The Monetary Board raised the BSP’s policy interest rates last month by 25 basis points to “rein in inflationary expectations.” The central bank’s 2008 inflation target of 3.0% to 5.0% was already breached in the first five months of 2008 with a cumulative average of 6.9%. The BSP now expects inflation to average 7.0% to 9.0% this year.

July 2007 Inflation Forecast
MBC Research forecasts July inflation at 2.2%–2.4%

3 August 2007 – MBC Research forecasts that the headline inflation rate in July will remain at 2.2%–2.4% from 2.3% in June.

The estimated general movement in prices last month takes into account the upward pressure on food prices because of the unusual dry spell in Luzon, the drop in demand for pork, the hike in fuel and LPG prices, and the rising prices of imported milk and flour products.

But the 1.1% appreciation of the peso against the greenback to P45.632/US$ in July from P46.16/US$ in June is expected to have kept inflation within a cumulative average of 2.6%.

For August, inflation may accelerate to 2.5% due to risks on consumer prices posed by the lack of rainfall in the northern part of the country, a possible round of regional wage increases, fuel and LPG price hikes, and power rate adjustments.

March 2007 Inflation Forecast
MBC Research sees 2.3%–2.6% inflation in March

In March, there was a P1.00-per-kilogram rollback in the domestic price of LPG. On the other hand, there was also a P0.50-per-liter hike in gasoline prices, and although PAGASA has already declared that the mild El Niño episode is over, the summer season has set in and this could have an impact on the availability and prices of food items.

If inflation in March is measured at 2.3%, it would be the lowest inflation rate in 86 months. If it comes in at 2.5%, the inflation rate would still be the lowest in 52 months.

February 2007 Inflation Forecast
MBC Research expects 2.8%–3.1% inflation rate in February

5 March 2007 – MBC Research expects inflation to have decelerated for the eleventh straight month, reaching a 46-month low of 2.8%–3.1% in February on the back of a strengthening domestic currency against the U.S. dollar.

Due to strong overseas workers’ remittances and foreign portfolio investment inflows, the average monthly peso-dollar reference rate appreciated for the eighth consecutive month, reaching P48.381/US$ in February.

MBC Research estimates that more than half of the weight of consumer price index items are imported, have imported components, or are sensitive to foreign exchange rate movements. Domestic pump prices of fuel have been rolled back, along with LPG, while currency exchange rate adjustments were reflected in last month’s utility bills.

Meanwhile, supplies of fresh vegetables could have become scarcer due to the colder-than-usual weather in the northern vegetable-producing provinces in February, but no noticeable impact has been reported on retail prices of vegetables. Despite rising prices of some items in demand and on sale for the Valentine’s season, MBC Research estimates month-on-month inflation to have only reached 0.0%–0.3% compared to 1.0% a year ago.

Monetary authorities earlier estimated February’s headline inflation rate at 3.0%–3.6%.

January 2006 Inflation Forecast
MBC Research expects 4.0%–4.3% inflation in January

30 January 2007 – MBC Research estimates the headline inflation in January to have dropped to 4.0%–4.3% due to the recent fuel price rollbacks and the reduction in electricity bills driven by a strong peso-dollar rate. In comparison, monetary authorities expect headline inflation to have fallen within the 3.9%–4.6% range.

Inflation already reached a 33-month low of 4.3% in December. However, inflation averaged at 6.2% in 2006, significantly higher than the 4%–5% Bangko Sentral target, as a result of the VAT rate hike and volatile oil prices abroad.

For full year 2007, MBC Research projects an average headline inflation rate of 4.2%–4.9%. The Bangko Sentral’s inflation target for 2007 remains at 4%–5% despite earlier reports that fiscal authorities agreed to change the government’s budget assumption for inflation to 3.3%–3.8%.

June 2006 Inflation Forecast
MBC Research expects 6.8%–7.2% inflation for June

28 June 2006 – MBC Research estimates June inflation to have reached 6.8%–7.2% from 6.9% in May given the four rounds of fuel price hikes in June totaling P2.00 per liter, coupled with the rising costs associated with the start of a new school year. Also, the rainy season could have affected prices of food items.

Based on data from the Commission on Higher Education, while 196 schools at the college level raised their tuition by less than or equal to the average inflation rate for 2005 of 7.6%, 194 schools increased their rates by more than that. Tuition increases have resulted in declining college enrollment each year.

May 2006 Inflation Forecast
MBC Research forecasts 7.4% inflation for May

1 June 2006 – MBC Research forecasts inflation to rise to 7.2%–7.4% in May on account of five rounds of fuel price hikes amounting to P2.50 per liter during the month. Liquefied petroleum gas prices also rose four times in May for a total hike of P2.00 per kilogram. Inflation was lower last April at 7.1%, but was higher at 8.5% in May 2005.

July 2005 Inflation Forecast
MBC Research projects
July inflation at 6.7%–7.0%

1 August 2005 – Despite the three rounds of fuel pump price increases amounting to P1.50 per liter in July, the inflation rate could have slowed down to 6.7% to 7.0% from 7.6% in June. MBC Research also takes into account the impact of the transport fare and regional wage hikes in its inflation projection for last month.

The temporary restraining order on the amended expanded value-added tax law, however, eased inflation concerns on fuel prices and power rates. The confirmation of the presence of a bird flu virus strain in a Bulacan farm could have also dragged down prices of dressed chicken.

Inflation has averaged 8.3% in the first six months, significantly higher than the government’s target of 5.0% to 6.0%.

MBC Research expects 8.6–8.8% inflation in May

27 May 2005 – MBC Research expects inflation to accelerate to 8.6–8.8% in May from 8.5% in April. On a month-on-month basis, however, inflation is projected to slow down to 0.3–0.5% from 0.6%. The forecast takes into consideration the three rollbacks in fuel pump prices during the month and the impact of the tailend of the mild dry spell on food prices.

The impact of any jeepney fare and minimum wage hikes are not yet reflected in this month’s consumer price index.