Inflation rate is expected to pick up slightly to 1.4 percent in February from 1.3 percent in January, following the adverse impact of the El Niño dry spell, the Finance Department said Thursday.
Finance undersecretary and chief economist Gil Beltran said in an economic bulletin inflation this month might have been 0.1 percentage point higher than in the previous month, but slower than 2.5 percent in February 2015.
“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,” Beltran said.
“Low rise in prices may be attributed to the continued depression in oil prices,” he said.
Power rate this month fell 16 percent to P9.14 per kilowatt-hour from a year ago, but was 5 percent higher than in January.
Electricity rate also declined in the past months, on lower generation charges, but slightly rebounded recently, following the decision of major oil-producing countries to freeze petroleum production.
Beltran said there could still be risks to stable consumer prices as the El Niño dry spell was expected to affect the supply side.
“Currently, threats to price stability will come from the supply side. For example, the dry spell may diminish fish catch and yield in fisheries,” he said.
Beltran said the Agriculture Department should adopt innovative strategies such as cloud seeding and expanding irrigation network to offset the adverse effect of dry spell.
Beltran said these measures would “avoid harvest shortfalls that could raise prices.”
He said the benign inflation outlook would enable the central bank to maintain its monetary stance and sustain rapid economic growth.
The inter-agency Development Budget Coordination Committee earlier retained the inflation target at 2 percent to 4 percent for this year up to 2019.