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Consumer price inflation came in
at 2.6 percent in February, the slowest rate in more than four
years, the government said Tuesday.
Analysts said
the figure could set the stage for a rate-cutting exercise by the
central bank, thus lowering the cost of capital and boosting
businesses.
Bangko Sentral
ng Pilipinas Governor Amando Tetangco said the better-than-expected
figure “further shows improving supply conditions and greater
capacity of the economy in harnessing domestic liquidity to support
productive activities.
“With the
encouraging inflation outlook, it also affirms greater elbow room
for setting monetary policy,” he said in a statement.
Last month’s
rise was below BSP and economist forecasts and was also down sharply
from 3.9 percent in January, with all commodity groups posting
smaller annual price gains, the National Statistics Office said.
It said the
increase in the February consumer price index was the lowest
recorded since December 2002, when the rate stood at 2.5 percent.
In the same
month last year, inflation was 7.6 percent.
Economists had
projected February inflation to come in at 3.1 percent to 4 percent,
slightly higher than the central bank’s own forecast of 3 percent
to 3.6 percent.
Consumer
prices declined 0.1 percent from the previous month, after having
risen 0.3 percent in January compared to December.
Prices for
food, beverages and tobacco (FBT) eased to 3 percent in February;
clothing, 2.7 percent; house and repair (H&R), 2.3 percent;
fuel, light and water (FLW), 1.5 percent; services, 2.4 percent; and
miscellaneous items, 2 percent.
For food
alone, prices further improved to 3 percent from 4.2 percent in
January.
Prices for
rice slid to 1.4 percent; corn, 5.9 percent; cereal preparations and
dairy products, 4.2 percent and 5 percent; eggs, 5.2 percent; fish,
3.4 percent; fruits and vegetables, 3.3 percent; meat, 2 percent;
and miscellaneous foods, 3.2.
“Favorable
weather conditions in major producing provinces in Luzon
particularly for the pinakbet vegetables noted during the month also
contributed to downward price adjustments,” the NSO said.
Only the price
of fish rose—0.8 percent from -0.7 percent—while corn posted
zero growth from 0.5 percent.
“With the
lower inflation rate in February, there’s a stronger possibility
that the central bank will cut its overnight interest rates by 25
basis points on Thursday,” said Jonathan Ravelas of Banco de Oro.
He attributed
the continued easing in inflation to the strong peso, which hit
six-year highs against the dollar last month on the back of the
country’s improving macro-economic fundamentals.
The central
bank’s key interest rates have been steady since October 2005,
although the monetary authority introduced a tiering system for its
overnight borrowing rate beginning November last year.
Under this
scheme, Bangko Sentral pays 7.50 percent for placements of up to P5
billion ($102.52 million) and lower rates for sums in excess of that
amount.
Its overnight
lending rate has been steady at 9.75 percent.
Socioeconomic
Planning Secretary Romulo L. Neri said positive developments in the
international price of oil and the agricultural production helped
drive the inflation rate down.
 --Darwin
G. Amojelar and AFP
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