Feb inflation seen picking up anew

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MANILA, Philippines — Headline inflation likely accelerated in February from January’s two percent print, with economists pointing to higher rice, fuel and utility costs as key drivers, although estimates suggest price growth remained within the Bangko Sentral ng Pilipinas (BSP)’s target range.

The Philippine Statistics Authority will release the official February inflation data on March 5.

BPI lead economist Jun Neri projected February headline inflation at three percent year-on-year, equivalent to a 0.7-percent month-on-month increase, driven largely by rice and energy costs.

“February inflation was likely driven by sustained rice and energy pressures, including a four-percent month-on-month rise in well-milled rice prices amid delayed January import arrivals following the lifting of the rice import ban,” he said.

Firmer global oil prices, with West Texas Intermediate crude reaching about a seven-month high of $65 per barrel, could add to inflation pressures, although this could be partly offset by easing costs of key food items such as vegetables.

Neri warned that inflation risks could intensify in the coming months depending on rice supply conditions.

“If realized, headline inflation could approach or breach four percent as early as April, largely contingent on the rice demand-supply dynamics in the coming months, which we continue to monitor closely,” he said.

Chinabank chief economist Domini Velasquez estimated inflation at 2.6 percent in February, up from two percent in January, citing continued increases in food and energy prices.

“The uptick was driven by continued month-on-month gains in the prices of rice and fish, along with higher energy costs,” Velasquez said.

She noted that domestic pump prices rose for seven straight weeks, while cooking gas costs and electricity rates in Manila Electric Co.-serviced areas also increased compared with January. These pressures were partly offset by lower prices of meat, eggs and vegetables.

Velasquez added that core inflation likely edged higher to 2.8 percent due to rising prices of alcohol, tobacco and utilities such as water, rent and maintenance.

For the full year, Chinabank sees inflation averaging 3.6 percent, near the upper end of the BSP’s target range, which could limit room for additional monetary easing.

Security Bank research head and chief economist Angelo Taningco also pegged February inflation at 2.6 percent, citing a broad range of contributors including higher food inflation, excise tax hikes on sin products, increases in utility rates and higher prices for housing rent, education, health as well as food and beverage services.

PNB economist Alvin Arogo shared a similar estimate of 2.6 percent, saying base effects alone accounted for about half of the expected 0.6 percentage-point increase from January.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said oil prices remained a key external risk to inflation in February, citing upward pressure from Middle East tensions, disruptions in Red Sea shipping routes and OPEC+ supply restraint alongside signs of firmer global demand.

He said higher oil prices typically show up first in fuel and transport costs before feeding into food distribution, utilities and fares, gradually adding to overall price pressures.

Ravelas noted that while there was no sharp spike in oil prices, the steady increase was significant because even modest gains can quickly pass through to domestic inflation, especially when combined with currency movements.

He said inflation risks in February were driven less by a sudden shock and more by persistent cost pressures, with oil prices quietly amplifying the overall inflation print. Based on these factors, he estimated February inflation at around 2.4 percent.

Ravelas added that geopolitical risks remain a key concern for oil markets, noting that heightened tensions involving Iran could threaten supply flows through the Strait of Hormuz, a major global shipping lane for crude oil.

Any disruption in the area, he said, could trigger a sharp increase in oil prices and pose upside risks to inflation.

Metropolitan Bank and Trust Co. (Metrobank) projected inflation at 2.4 percent, noting that rice price dynamics continue to play a central role. The bank said farmgate prices increased month-on-month following a four-month import ban, while delayed import arrivals sustained price gains into early February.

Even so, annual rice deflation remains in place, providing some downward pressure on headline inflation. Metrobank also said onion prices could ease inflation as harvest season approaches, although vegetables, fruits and seafood may push prices higher due to low base effects.

On the energy side, the bank said electricity prices were higher year-on-year in many areas, particularly outside Metro Manila, while housing rents also remained a key contributor as annual lease contracts are typically renewed at the start of the year.

“Food, energy and rental prices continued to drive headline inflation in February,” Metrobank said, adding that faster inflation could lead to a steeper bond yield curve and may prompt the BSP to avoid cutting rates too aggressively, which could support the peso.

UnionBank chief economist Carlo Asuncion offered a more moderate view, estimating headline inflation at around 2.2 percent year-on-year.

“The modest uptick was driven mainly by firmer food prices, particularly rice and select fresh produce, as supply conditions remained tight in some markets,” Asuncion said.

He added that while transport and fuel costs exerted some pressure, these were not broad-based enough to significantly alter the inflation path, with non-food inflation remaining generally benign.

Asuncion said inflation is likely to remain well anchored in the near term, potentially giving the BSP room to gradually shift toward a more accommodative policy stance later in the year if food supply risks and oil price volatility remain manageable.