Hongkong and Shanghai Banking Corp. is not ruling out the possibility of higher inflation in the coming months despite the slight slowdown to 8.6 percent in February from 8.7 percent in January.
HSBC said in a report Thursday that food inflation remained “problematic” because of non-tariff barriers.
“Despite the emergency importation of onions and sugar, the year-on-year rises in vegetables and tubers [33.1 percent] and sugar, confectionery and desserts [37.0 percent] were still above 30 percent. As argued in a previous note, the imposition of non-tariff barriers to these goods does not put a ceiling on how high prices can rise,” HSBC said.
“Indeed, the momentum of inflation eased significantly in February, but it’s difficult to determine the peak with confidence given the extent to which inflation was spreading to other goods and services,” it said.
The foreign bank said the slower 8.6 percent inflation in February was due mainly to favorable base effects. It said that across all sub-commodity baskets, only transport CPI eased on a year-on-year basis because of lower fuel prices.
It said of the 13 CPI sub-commodity baskets, 10 saw their inflation rates accelerate. Inflation generally remained high for both goods and services. Core inflation also picked up despite the headline figure finally easing.
Bangko Sentral ng Pilipinas Governor Felipe Medalla earlier said monetary authorities remained hawkish and were ready to act accordingly if inflation in February continued to accelerate.
He said the most likely scenario could be one more rate hike, which could change depending on the trajectory of inflation.
The BSP on Feb. 16 raised the key interest rate by another 50 basis points to 6 percent to rein in inflation that blew past the target range last year and accelerated to a 14-year high of 8.7 percent in January.
The BSP’s Monetary Board noted that the latest baseline inflation forecast path had shifted higher relative to the previous assessment.