Headline inflation eased in the fourth quarter of 2014 to 3.6 percent, pulled down by further sequential declines in food, electricity and oil prices, but still stood higher than year-ago levels, data from the central bank showed on Friday.
Growth in the consumer price index (CPI) slowed from 4.7 percent in the third quarter, but accelerated from 3.4 percent in the fourth quarter of 2013, the Bangko Sentral ng Pilipinas (BSP) said in its Fourth Quarter 2014 Inflation Report .
This brought inflation for the whole year of 2014 to an average of 4.1 percent, confirming the 2014 estimate announced by the BSP earlier this month.
It was the sixth consecutive year inflation stayed within the official target range beginning in 2009, the BSP said.
“Food inflation declined, owing to ample domestic supply of key food items, while non-food inflation decelerated as electricity rates and prices of domestic petroleum products declined,” it said.
Food supply improves
During the quarter in review, adequate domestic supply of key food items and easing port congestion amid moderating prices of imported commodities contributed to the decline in food inflation, the BSP said.
Food inflation slowed to 6.6 percent from 8.3 percent a quarter earlier.
Non-food inflation decelerated as a result mainly of the downward adjustment in electricity rates resulting from lower generation charges, as well as price reductions in kerosene, liquefied petroleum gas, diesel, and gasoline (reflecting declines in international oil prices).
Non-food inflation eased to 1.4 percent in the quarter from 2.4 percent in the preceding quarter as a result of slower price increases in electricity, gas and other fuels, it said.
The central bank said the latest baseline inflation forecasts show that its inflation outlook continues to stay within the target range, with the baseline inflation projection for 2015 down from the previous report due mainly to easing international oil and rice prices.
The BSP has set its inflation target range for this year at between 2 percent and 4 percent.
“Risks to the inflation outlook remain broadly balanced, supporting expectations of a manageable inflation environment. Pending petitions for utility rate adjustments and the potential power shortages are seen posing upside risks to the baseline inflation forecasts,” it said.
Downside risks, on the other hand, could stem from slower-than-expected global economic activity, it added.