UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting comment on the latest release of inflation figures in Philippines.

Key Takeaways

“Headline inflation accelerated at a faster pace of 4.0% y/y in Mar (from +3.0% in Feb), surpassing our estimate (3.6%) and Bloomberg consensus (3.7%). It was primarily driven by surging fuel and food prices amid upward adjustments in electricity rates and a weaker Peso against USD.”

“We have raised our 2022 full-year inflation target to 4.5% (from 3.5% previously; BSP est: 4.3%; 2021: 3.9%), after taking into consideration a higher-than-expected inflation outturn and broad-based price increases in Mar. Our revision also rests on the continued upward pressure on commodity prices and supply chain snags brought by the prolonged Russia-Ukraine conflict as well as the recovery momentum in domestic demand following easing of COVID-19 containment measures and border reopening since Feb. The ongoing petitions for a hike in minimum wage and public transport fare will add further upside risks to the nation’s inflation outlook.”