FINANCE Secretary Benjamin E. Diokno said Tuesday that inflation is likely to have peaked, after the 8.6% reading in February slowed from January’s 8.7%.
“In fact, (economic managers have) changed the forecast of when (inflation) will hit the upper end of the 2-4% range,” he said in a news conference.
February inflation came in towards the lower end of the central bank’s 8.5%-9.3% forecast range for the month.
The Philippine Statistics Authority is scheduled to release March inflation data on Wednesday, April 5.
A BusinessWorld poll of 16 analysts yielded a median estimate of 8.1% for March headline inflation, near the upper end of the 7.4% to 8.2% forecast of the Bangko Sentral ng Pilipinas (BSP) for the month.
The March 2022 inflation reading was 4%. If the analyst poll pans out, March 2023 would be the 13th straight month that inflation exceeded the BSP’s 2-4% target for the year.
Mr. Diokno’s outlook on inflation reinforces the BSP’s recent confidence index (CI) results, which revealed that 26% of companies surveyed were planning to expand in the next 12 months, up from 22.9% previously.
“Based on the BSP’s recently released business expectations survey, the overall business outlook is more upbeat amid improving expectations of consumer sentiment not only in the first quarter but also the next 12 months,” Mr. Diokno said.
The CI, compiled from the results of the first quarter Business Expectations Survey, rose to 34% during the period from 23.9% in the fourth quarter of 2022.
Mr. Diokno also cited the BSP’s outlook for a Purchasing Managers’ Index (PMI) reading of around 52.5%.
A reading of above 50 on the PMI signals healthier activity among manufacturers, who must procure raw materials in advance. Expanded orders indicate confidence in the strength of markets by the time the raw materials are ready to be processed and sold.
Separately, Mr. Diokno said the Interagency Committee on Inflation and Market Outlook (IAC-IMO) will be chaired by the National Economic and Development Authority (NEDA) and co-chaired by the Department of Finance (DoF).
The Department of Budget and Management will also serve as vice-chair, with the Department of Agriculture, Department of Energy, Department of Science and Technology, and Department of Trade and Industry sitting as members.
The DoF will provide the committee secretariat.
The IAC-IMO will also use satellite and radar technology to monitor the state of various crops like rice, corn, sugarcane, coconut, and tree cover, among other economic activities, Mr. Diokno said.
The committee will monitor crops every two weeks and will have a budget of P150 million for its operations.
Partners in the monitoring activity are State Universities and Colleges, the Sugar Regulatory Administration, and the Philippine Statistics Authority (PSA).
“What we need is information, hard data, timely information so that appropriate interventions or policy responses can be undertaken proactively,” Finance Undersecretary Zeno Ronald R. Abenoja said.
“There’s a lag in which they become available, but if we can get more hard data, and then bring to bear developments in data science, including AI and machine learning to extract information from these images, then we can identify possible disruptions in these commodities. That’s how we think the IAC could improve the way we respond to policy pressures,” he added. — Aaron Michael C. Sy