The inflation rate eased to a four-month low of 0.9 percent in February from 1.3 percent in January and 2.5 percent year-on-year following the slump in global oil and lower food prices, the Philippine Statistics Authority said Friday.
PSA data showed the February figure was the lowest since the 0.4 percent inflation rate recorded in October last year.
The figure also matched the lower end of the central bank’s inflation forecast of 0.9 percent to 1.7 percent for the period, and lower than the median forecast of 1.4 percent.
The National Economic and Development Authority attributed the low inflation rate to the downward price movements in transport, and electricity, gas and other fuels, and slower increases in the prices of food and non-alcoholic beverages, clothing and footwear, among others.
“The persistent global oversupply and record stockpile levels of crude oil contributed to this softer inflation, as prices of Dubai oil, Brent and West Texas Intermediate continued to weaken in January 2016,” said Economic Planning Secretary Emmanuel Esguerra.
Standard Chartered Bank economist Jeff Ng said the low figure indicated weak inflationary pressures.
“We previously thought that the uptick in inflation is temporary caused by [the] storm impact on fish and vegetable prices. However, stable rice inflation implied that the previous uptrend will not be sustained,” Ng said in an e-mail.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr., meanwhile, said monetary authorities would keep a close watch on the possible second-round effects to inflation coming from global oil prices, although the February inflation decelerated.
He said oil prices and changes in the global growth prospects could affect the country’s economic growth trajectory and inflation outlook.
“Inflation for February at 0.9 percent is at the low end of our forecast range of 0.9 percent to 1.7 percent. Declines in housing, utilities, gas and transport were seen as causing slower inflation in the month,” Tetangco said in a text message.
“We will continue to monitor price movements, including emerging second-round effects from global oil prices and any shifts in global growth prospects, as these impact domestic growth and inflation dynamics and see if there is need to make any adjustments in policy levers,” Tetangco said.
Domestic petroleum prices remained soft, with gasoline declining 10.4 percent; liquefied petroleum gas, -11.7 percent; diesel, -26.4 percent; and kerosene, -22.6 percent).
Bank of the Philippine Island market research and strategy research officer Nicholas Mapa said the subdued oil price environment led to lower rates in the electricity, gas, water, utilities and transport sectors.
“As long as oil prices remain subdued, we can expect these subsectors to see depressed inflation as well. Base effects are also coming into play as first quarter 2015 was the high point for inflation in the Philippines,” Mapa said in an e-mail.
“I do expect inflation to trend higher going forward as base effects reverse With Julito G. Rada
and oil prices rebound, which will have its corresponding effects on domestic prices,” he said. With Julito G. Rada