RIZAL Commercial Banking Corp. (RCBC) said average inflation is expected to slow to 4.5% to 5.5% in 2023 as oil prices ease, with the lower end of his forecast in line with the government’s official projection of 4.5%.
In an email, the bank’s Chief Economist Michael L. Ricafort said he sees inflation in the first quarter averaging 7.2%, sliding down to 6.1% in the second quarter. Third quarter inflation is forecast at 4.8%, and fourth quarter 3.4%.
“Inflation will ease largely due to global crude oil prices already easing to near 1-year lows recently, alongside the easing of other global commodity prices in recent months,” Mr. Ricafort said.
Nymex crude oil prices decreased 13.84% to $79.35 per barrel on Christmas day from the Feb. 23 close of $92.10 at the outset of the Russia-Ukraine war.
Brent crude oil prices decreased 13.6% to $83.92 on Dec 23 from Feb. 23’s close at $97.13 per barrel; and West Texas Intermediate (WTI) settled at $79.56, a 14.28% decline from its $92.1 close on Feb. 23.
Inflation in the first 11 months was estimated at 5.6%, with the consumer price index (CPI) rising to a 14-year high of 8.0% in November year-on-year, he said.
Mr. Ricafort added that the recent recovery of the peso from a record high P59 against the dollar in September and October will help ease inflation going forward.
The peso closed at P55.15 Friday on the back of increased remittances during the holiday season, leading to an increase in conversion of dollars to pesos.
The peso recently strengthened past the P56 level on Dec. 2, finishing at P55.74. The P55 level was last touched on Aug. 19 with a close of P55.93.
Mr. Ricafort also noted that the average inflation in 2023 could exceed the target range due to the impact of wage and transport fare hikes.
In June, the Metro Manila Wage Board ordered a P33-minimum wage hike. Wage boards can only act on wage petitions a year after a region’s last wage order.
Meanwhile, The Land Transportation Franchising and Regulatory Board (LTFRB) approved fare increases for modern and traditional public utility jeepneys (PUJ), public utility buses (PUB), taxis, and transport network vehicle service (TNVS) in September, which took effect in October. — Aaron Michael C. Sy