Inflation slows in February with cheaper transport, food costs

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Inflation softened in February amid lower transport, electricity, and food costs, the Philippine Statistics Authority says.

Metro Manila (CNN Philippines, March 5) — Inflation softened in February amid lower transportation, electricity, and fuel costs, the Philippine Statistics Authority said Thursday.

Inflation eased to 2.6 percent in February, slower than market expectations. This is also softer than the 2.9 percent pace logged in January, and the 3.8 percent inflation rate in February 2019. This is the slowest since December.

Lower food, utility, and transport costs as well as a softer pickup in the price of alcoholic drinks and cigarettes led to softer inflation, the PSA said.

In particular, the price of food items inched up by just 2.1 percent coming from 2.2 percent the previous month. Expenses for housing, water, electricity, gas and other fuels likewise eased to a 1.7 percent increase, data showed. Transport costs likewise went up by just 1.8 percent, coming from a 3 percent climb the previous month.

Inflation tracks the price movements of basic goods like food and fuel.

Rice prices sustained their drop since May last year as a new law allowed cheap imports of the crop into the country. On the other hand, fish prices rose by 8.6 percent, vegetables by 7.8 percent, and meat by 2.9 percent. Authorities earlier said that prices of other meat items have been on the rise as consumers look for alternatives for pork, amid the African swine fever. On the other hand, retail pump prices have been slashed in recent weeks to mirror declines in world crude prices, according to the Department of Energy.

The cost for furnishing and household equipment rose faster at 3.5 percent. Meanwhile, other items in the typical consumer basket such as restaurant expenses, clothing and footwear, health, and recreation saw price increases steady from January.

By location, prices climbed faster in the provinces at 2.8 percent, versus a 2 percent increase in Metro Manila. Inflation was fastest in Bicol at 3.6 percent, followed by Western Visayas (3.3 percent) and Central Luzon and Mimaropa (3.2 percent).

The February figure brought the two-month average to 2.8 percent, still within the central bank's 2-4 percent target range for the year.

Bangko Sentral Governor Benjamin Diokno has said that local monetary authorities would factor in the latest inflation figures for its upcoming rate-setting meeting. He clarified that the BSP would not match the move of the United States Federal Reserve with an unplanned rate cut amid the novel coronavirus outbreak.

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"The emergency half point cut by the Fed matters. The fast spreading COVID-19, and its likelihood of slowing global growth, matters. The February inflation matters and so with the inflation prospects for the year. All these and more will serve as inputs to the Monetary Board’s decision on March 19. One thing is certain: there will be no off-cycle MB move to cut policy rates," Diokno said in a text message on Wednesday night.