The NSO said the inflation rates for the crucial food, beverage and tobacco sector remained unchanged at 3.3 percent in February and January while utilities and services costs actually went down.
The bird flu scare hurt demand for chicken, causing a slight drop in prices of that product, the government statistics office said, adding that key fruits and vegetables were also lower.
Citing data from the NSO, Socioeconomic Planning Secretary Romulo L. Neri noted that headline inflation using 2000 as the new base year was actually lower at four percent in February from 4.1 percent in the previous month. Using the 1994-based consumer price index (CPI) series, inflation was unchanged at 3.4 percent.
The NSO started using the new system in January to reflect changes in Filipino consumption patterns.
Bangko Sentral ng Pilipinas (BSP) Governor Rafael B. Buenaventura said the newest figures showing little movement in the inflation rate gave monetary authorities " a bit more room for flexibility" in setting policy.
"That’s good. Better than expected," Buenaventura said. "It gives us flexibility but we’re watching it as inflation rate expectation is what we have to be conscious about."
The BSP, which has made inflation the main criterion of monetary policy, is due to hold a rate-setting meeting next week.
Economists have forecast average headline inflation this year to hit the higher end of the BSP’s target of four to five percent as a weak peso and election-related spending boost prices.
Average inflation in 2003 was 3.1 percent, lower than the government target of 4.5 percent to 5.5 percent and the same as the 3.1 percent average in 2002.
"So far, consumer prices have been steady due to businesses’ or merchants’ inability to raise prices given lack of confidence because demand continues to be weak," said AB Capital economic analyst Jose Vistan.
The inflation rate in Metro Manila stood at four percent in February compared to 3.8 percent in January while the inflation rate outside the capital fell to 3.1 percent from 3.3 percent.
NSO has now started to release inflation in two series, the "core" inflation and headline inflation.
While headline inflation is calculated at the yearly change in the overall CPI, the "core" or underlying inflation is measured as the rate in change of headline CPI after unstable items are removed.
In other words, core inflation is headline inflation minus price of volatile items such as rice, corn, fruits and vegetables, liquefied petroleum gas (LPG), kerosene, oil, gasoline and diesel.
According to Neri, the Development Budget Coordination Committee (DBCC) and the BSP will continue to monitor both headline and core inflation and take recovery measures to ensure that the 2004 inflation target is not breached.