Price hikes expected to have picked up in July

INFLATION likely picked up slightly in July on the back of higher prices of food, electricity, and fuel, analysts said in a BusinessWorld poll, even as some said the relatively steady pace should allow the central bank to keep interest rates unchanged for now.

The poll of 10 economists late last week yielded a median inflation estimate of 2.85%, which if realized will inch up from June’s 2.8% reading and from July 2016’s 1.9%. Finance Undersecretary Gil S. Beltran gave a 2.7% estimate last week.

The Philippine Statistics Authority is scheduled to report official inflation data on Friday.

The economists pegged July inflation at 2.7-3.0%, assured that the pace of price increases will remain well within the central bank’s 2-4% target band for the year.

Inflation averaged 3.1% last semester, matching the full-year 2017 forecast given by the Bangko Sentral ng Pilipinas ( BSP) during its June 22 monetary policy review.

“I think the main drivers of July inflation are food price inflation, the electricity rate hike and higher fuel prices,” Angelo B. Taningco, economist at Security Bank Corp., said in an e-mail.

Fuel retailers had announced a P0.70 per liter increase in gasoline prices and P1.20/ liter for diesel effective July 11 due to higher world crude prices. This was followed by price rollbacks a week later amid persistent doubts that moves by the Organization of the Petroleum Exporting Countries can sufficiently trim a huge supply glut and lead to a recovery in global prices.

Power distributor Manila Electric Co. announced a P0.0761per-kilowatt- hour increase in basic rate following June’s P1.43/ kWh record cut. July’s P0.0799/ kWh hike in generation charge was partly offset by a refund for 2014-2016 over-collections.