Headline inflation could slow to 1.2 percent this month given stable food prices, cheaper fuel and lower power rates, the Department of Finance (DOF) said.
“Inflation this month may slow down to 1.2 percent, half the rate in the same month of last year and 0.3 percentage point lower than last month,” the department said in its latest Economic Bulletin.
“This comes as food prices normalize, fuel prices continue to fall, and electricity rate reaches five-year low,” it added.
Inflation in January 2015 was 4.2 percent, while the rate in December picked up to 1.5 percent from November’s 1.1 percent. Official January 2015 data is scheduled to be released next week by the Philippine Statistics Authority.
The department pointed out that Manila Electric Co.’s rate for this month fell to P8.72 per kilowatt-hour, 13 percent lower than the rate in the same month of last year and 2 percent lower than December’s.
“Electricity rate has declined in the past months on the back of lower generation charges,” it noted.
Low fuel prices arising from cheap oil, the department pointed out, would extend a period of benign inflation that will help the economy grow.
“This will enable the country to grow faster and investments to continue rising to take advantage of the similarly benign interest rate environment despite the Fed liftoff and volatile financial markets,” it said.
Investors can also take advantage of a spike in consumer demand that usually accompanies the election season, the department said.