(CNN Philippines) — Inflation during the first three months of 2015 eased off at 2.4%, according to the Bangko Sentral ng Pilipinas.
In a recent statement, the bank said that this figure remained well within the government target of 2% to 4%.
The figure is substantially lower than the 4.1% recorded in the same period of 2014, and the 3.6% registered last quarter.
The BSP credits the deceleration to slower increases in food prices brought by “adequate domestic supply.”
Likewise, the bank notes that the price increase of nonfood products also slowed down because of lower prices in domestic petroleum products and power rates.
Core inflation, which excludes selected indices such as food and energy prices because of their price volatility, also decreased in the first quarter.
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The slower inflation comes on the heels of what the bank believes to be solid domestic demand.
The BSP cited 2014’s full-year gross domestic product (GDP) growth rate of 6.1%, which fell within the government target of 6% to 7%.
“Output growth was driven by strong household spending, robust exports growth, and accelerated government spending on the expenditure side, and by solid gains in the services and industry sectors on the production side,” the bank said.
“Indicators of demand also continued to point to a sustained economic upturn in the near term. Vehicle sales also continued to be brisk, while the Purchasing Managers’ Index (PMI) remained on an uptrend.”
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Likewise, it also said that global economic prospects have gradually improved. But such comes with a caveat — the bank has noticed a diverging growth across countries. The BSP noted firm growth in the U.S., a recovery in the euro area, and a modest expansion in Japan.
“By contrast, growth conditions in major emerging markets, particularly China and India, have stayed generally muted. At the same time, the global inflation environment remained benign as the outlook for prices of international commodities, particularly oil, continued to be subdued.”
In its monetary stance policy meeting last March, the BSP’s Monetary Board decided to maintain all of its key policy rates and reserve requirement ratios, citing a manageable inflation environment, risks to the inflation outlook staying broadly balanced over the policy horizon, and inflation expectations remaining well within target.
“Going forward, the BSP will remain attentive to evolving price and output developments and stand ready to undertake preemptive policy action as necessary to safeguard its price and financial stability objectives.”
