Feb inflation seen picking up to 1.4%

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DOF tags higher power rates, food and beverage prices
Headline inflation is likely to rise slightly to 1.4 percent this month, the Department of Finance said, driven by higher power rates, as well as an uptick in food and beverage prices.

“Consumer prices may rise, on average, by 1.4 percent for the month of February, slightly higher than that posted last month but lower than in the same month last year,” the department said in its latest Economic Bulletin.

Inflation moderated to 1.3 percent in January from December’s 1.5 percent. February of last year saw the rise in consumer prices hit 2.5 percent.

Official February 2016 data is scheduled to be released next week by the Philippine Statistics Authority.


The Finance department pointed out that Manila Electric Co.’s rate for this month had been raised to P9.14 per kilowatt-hour, 4.81 percent higher than the rate in the last month.

It also said that prices of food and non-alcoholic beverages likely rose by 2.4 percent this month, faster than the 1.7 percent in January.

The alcoholic beverages and tobacco index also seen to inch up to 5.4 percent in February from a month ago’s 4.7 percent.

Expected to offset these are lower prices of clothing and footwear; health; communication; recreation and culture; eduction; and restaurant and miscellaneous services indices.

“Benign inflation will enable the central bank to maintain its monetary stance and sustain rapid economic growth,” the agency said.

At its last monetary policy meeting, the Monetary Board of the Bangko Sentral ng Pilipinas decided to keep overnight borrowing and lending rates at 4 percent and 6 percent, respectively. The special deposit account rate was kept at 2.5 percent, while the reserve requirement ratio for banks still stands at 20 percent.

“Currently, threats to price stability will come from the supply side. For example, the dry spell may diminish fish catch and yield in fisheries,” the Finance department said.

It said the Department of Agriculture needed to adopt innovative strategies such as cloud seeding and expanding the country’s irrigation network to address the El Nino-induced dry spell and avoid harvest shortfalls that could raise prices.

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