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Senior Economist Julia Goh at UOB Group and Economist Loke Siew Ting evaluate the recent inflation figures in the Philippines.

Key Quotes

“Headline inflation surprised with a moderation to 4.5% y/y in Mar (from 4.7% in Feb), snapping its 5-month uptrend. It came within BSP’s monthly inflation forecast (4.2%-5.0%) even though the reading was below our estimate (4.8%) and Bloomberg consensus (4.9%). The slowdown in Mar inflation was largely due to cheaper fresh food, electricity rates, and routine household maintenance amid the government’s non-monetary policy measures to address supply issues for meat.”

“Should global oil prices stay steady at around USD60/bbl and the effectiveness of non-monetary interventions gather further momentum, Mar’s inflation outturn will affirm the central bank’s view that consumer price pressures will not overshoot the 5.0% level for the entire year of 2021. BSP’s view is also premised on uncertainties surrounding the pandemic and mass vaccination program. Headline inflation is expected to taper off back to BSP’s 2.0%-4.0% target range in 2H21. We maintain our 2021 full-year inflation outlook at 4.0% (BSP forecast: 4.2%; 2020: 2.6%).”