Inflation inches up to 2.5% in Feb

MANILA, Philippines - Inflation climbed to 2.5 percent in February from an 18-month low of 2.4 percent in January as a result of the price increases in oil and other utility, the Philippine Statistics Authority reported yesterday.

Inflation was 4.1 percent a year ago.

The current figure brings the year-to-date average to 2.4 percent,  within the Bangko Sentral ng Pilipinas’ 2.2 to three-percent forecast for last month and near the lower-end of its full-year target of two to four percent.

Without food and oil prices, core inflation rose to 2.5 percent in February from 2.2 percent in January.

“Inflation over the policy horizon is seen to remain manageable,” BSP Governor Amando M. Tetangco Jr. said in a text message to reporters.

“While we see the stance of policy still appropriate at this time, we continue to watch global developments, including possible strong reversals in oil price trends and changes in investor sentiment which could create market volatilities and affect inflation expectations,” Tetangco said.

The BSP last month kept key policy rates steady as inflation expectations fell within the target ranges for this year and the next. The overnight borrowing and overnight lending rates were last tweaked in the third quarter of 2014 to anchor inflation expectations.

Looking at inflation by region, the rate in the National Capital Region went up to 2.2 percent in February from 1.5 percent in January. Areas outside the capital, meanwhile, saw the rate fall to 2.6 percent from 2.7 percent.

By commodity group, the housing, water, electricity, gas and other fuels index rose in February but remained in the negative at -1.1 percent from -2.1 percent in January.

The transport index also increased at -0.5 percent from -1.3 percent in a month prior.

But the food and non-alcoholic drinks index slid to 4.8 percent from 5.4 percent, while the alcoholic beverages and tobacco index fell to 3.9 percent from 4.1 percent.

The clothing and footwear index also dropped to 3.1 percent from 3.2 percent, while the furnishing and household equipment index decreased to 2.2 percent from 2.4 percent.

The growth in the communication index eased to -0.1 percent in February from 0.0 percent in January, while the restaurant and miscellaneous goods and services index sank to 1.5 percent from 1.6 percent.

The following indices, meanwhile, remained unchanged from the January: health (2.7 percent); recreation and culture (1.2 percent); and education (5.1 percent).

UK-based Barclays, in a research note yesterday, said the low inflation gives the BSP room to keep policy rates unchanged as domestic growth also remains strong.

“We continue to forecast the next policy rate hike will take place the fourth quarter of 2015,” the bank said. – With Ted Torres