Inflation in February climbed to a 26-month high of 4.7 percent from 4.2 percent in January, driven by higher prices of food and non-alcoholic beverages, the Philippine Statistics Authority said Friday.
It was the fastest increase in consumer prices in more than two years since it hit 5.1 percent in December 2018. Inflation reached 2.6 percent in February 2020.
Data showed inflation averaged 4.45 percent in the first two months, beyond the government’s 2021 target range of 2 percent to 4 percent.
But the February inflation rate was within the Bangko Sentral ng Pilipinas’ forecast range of 4.3 percent to 5.1 percent for the month.
BSP Governor Benjamin Diokno said the latest outturn was consistent with the bank’s assessment of a transitory uptick in inflation in the first half, reflecting the impact of weather-related disturbances, the African swine fever on food prices, higher global oil prices and as positive based effects.
“Average inflation is expected to remain within the 2 to 4 percent target range over the policy horizon. The projected upward trend in inflation is seen to be temporary, driven primarily by supply-side factors,” Diokno told reporters in a message.
He said the overall balance of risks to the future inflation continued to lean toward the downside, owing to the continued uncertainty caused by the pandemic on domestic and global economic activity.
“Upside risks could emanate from the possibility of an early roll-out of COVID-19 vaccines in the Philippines. The sources of near-term inflation are supply-side shocks in nature that should not require a monetary response unless they lead to second-round effects,” Diokno said.
He said the Monetary Board would consider carefully recent price developments that could influence the outlook for inflation along with evidence of second-round effects during the monetary policy meeting on March 25, 2021.
“The BSP stands ready to deploy its full arsenal of instruments as needed in fulfillment of its mandate to maintain price and financial stability conducive to sustainable economic growth,” Diokno said.
ING Bank Manila senior economist Nicholas Mapa said although the target range of 2 to 4 percent was breached for the second month, the BSP likely was “to stay on the sidelines.”
“We expect BSP to remain sidelined for 2021 while inflation will likely remain elevated in the near term before gradually decelerating by the third quarter. The peso will likely move sideways as Diokno suggests that a rate hike is not on the table for now,” Mapa said.
National statistician and civil registrar general Dennis Mapa said in an online briefing that the uptick in February inflation was mainly brought about by the increase in the inflation of the heavily-weighted food and non-alcoholic beverages at 6.7 percent during the month, up from 6.1 percent in January.
Contributing to the uptrend were the higher annual increments recorded in the indices of alcoholic beverages and tobacco, 12.2 percent; housing, water, electricity, gas, and other fuels, 0.9 percent; health, 2.9 percent; transport, 10.4 percent; communication, 0.3 percent; and restaurant and miscellaneous goods and services, 3.2 percent.
Inflation slowed down for furnishing, household equipment and routine maintenance of the house at 2.4 percent. The indices of the rest of the commodity groups retained their previous month’s annual rates.
Excluding selected food and energy items, core inflation inched up to 3.5 percent in February from 3.4 percent in January.
“At the national level, inflation for food picked up further to 7.0 percent in February 2021, from 6.6 percent in the previous month. In February 2020, inflation for food was observed at 2.1 percent,” Mapa said.
The meat index continued to move upward as its annual rate went up to 20.7 percent in February. Faster annual upticks were also noticed in the indices of fish at 5.1 percent; oils and fats, 3.3 percent; and food products not elsewhere classified, 4.6 percent.