Feb inflation reverses slowdown; up at 2.5%

0

inflationHeadline inflation picked up pace to 2.5 percent in February from 2.4 percent in January, reversing a five-month slowdown, official data showed on Thursday.

Compared with the year-earlier, however, the latest inflation rate decelerated substantially from 4.1 percent.

The February figure released by the Philippine Statistics Authority (PSA) came within the central bank’s forecast range of between 2.2 percent and 3 percent for the month, as well as private analysts’ estimates of between 2.4 percent and 2.7 percent.

The National Economic and Development Authority (NEDA) explained that the uptick in petroleum prices and higher utility rates during the month in review offset the slow increase in food prices and pushed headline inflation slightly higher.

Despite this, the agency said inflation remains moderate, which Socioeconomic Planning Secretary Arsenio Balisacan attributed to the normalization of the supply chain and a relatively stable peso in the first two months of 2015.


“There were no new major economic shocks such as adverse weather conditions. The supply chain also normalized, partly due to the easing of port congestion. The peso, likewise, remained relatively stable due to the country’s strong external position,” Balisacan, who is also the NEDA director general, said.

However, the NEDA chief stressed that a lingering possibility of an El Niño occurrence in the first quarter of 2015 poses risk of inflation within the immediate term.

With this, he said programs to increase productivity and ensure sufficiency in the supply of key commodities are needed.

“Likewise important is addressing the looming power woes and creating better logistics supply chains to reduce production and transport costs,” Balisacan added.

The National Economic and Development Authority (NEDA) explained that the uptick in petroleum prices and higher utility rates during the month in review offset the slow increase in food prices and pushed headline inflation slightly higher.

Despite this, the agency said inflation remains moderate, which Socioeconomic Planning Secretary Arsenio Balisacan attributed to the normalization of the supply chain and a relatively stable peso in the first two months of 2015.

“There were no new major economic shocks such as adverse weather conditions. The supply chain also normalized, partly due to the easing of port congestion. The peso, likewise, remained relatively stable due to the country’s strong external position,” Balisacan, who is also the NEDA director general, said.

However, the NEDA chief stressed that a lingering possibility of an El Niño occurrence in the first quarter of 2015 poses risk of inflation within the immediate term.

With this, he said programs to increase productivity and ensure sufficiency in the supply of key commodities are needed.

“Likewise important is addressing the looming power woes and creating better logistics supply chains to reduce production and transport costs,” Balisacan added.

The PSA noted mixed price movements among the commodity groups during the month.

“While negative annual rates were still observed in the housing, water, electricity, gas and other fuels and transport indices, these rates were lesser compared with those in January,” it said in a statement.

The PSA added that slower rates were seen in the indices of food and non-alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; furnishing, household equipment and routine maintenance of the house; and restaurant and miscellaneous goods and services.

The rest of the commodity groups held steady from the previous month’s growth pace while the communications index slowed, it said.

‘Still manageable’
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the February rate of 2.5 percent puts the year-to-date average at 2.4 percent, still within the government’s projected range of 2 percent to 4 percent for 2015 until 2018.

In a text message to reporters, Tetangco stressed that inflation over the policy horizon is seen remaining manageable.

“While we see the stance of policy still appropriate at this time, we continue to watch global developments, including possible strong reversals in oil price trends and changes in investor sentiment, which could create market volatility and affect inflation expectations,” he said.

 ‘Sticky’ core inflation
UK-based investment bank Barclays said that given the February inflation data, it expects inflation for the entire year to stay broadly within the BSP’s target range, “with lower energy prices and easing rice inflation partly mitigated by sticky core inflation.”

Core inflation, which excludes select food and energy items, inched up to 2.5 percent in February from 2.2 percent in January but slowed from 3 percent posted in the corresponding period last year.

“The BSP appears comfortable with its current policy stance, as although low inflation is leaving room to keep policy on hold, growth remains robust,” Barclays said in its Emerging Markets Research note.

The bank noted that congestion at the Manila Port, which began in February 2014, has now been cleared, removing a key obstacle to export growth.

In Metro Manila, consumer prices rose 2.2 percent from 1.5 percent month-on-month, but slowed from 2.8 percent a year earlier.

In areas outside Metro Manila, February inflation slowed to 2.6 percent from 2.7 percent in January and 4.5 percent in the year-earlier period.

Share.
.
Loading...

Please follow our commenting guidelines.

Comments are closed.