Metro Manila (CNN Philippines, February 28) — Inflation could have softened in February amid cheaper electricity, fuel, and food costs, a unit of the Bangko Sentral ng Pilipinas (BSP) said Friday.
The central bank’s Department of Economic Research said inflation likely settled between 2.4-3.2 percent for the month, still within the government’s 2-4 percent target band. To compare, inflation logged at 2.9 percent in January, coming from a 2.5-3.3 percent estimate range. The latest forecast is still slower than the 3.8 percent inflation rate logged in February 2019.
“Lower prices of petroleum products, electricity, and rice as well as other food products are expected to temper price pressures in February,” the BSP unit said in a statement.
Power distributor Manila Electric Company or Meralco earlier announced that rates will be slashed by ₱0.59 per kilowatt-hour for the month due to lower generation charges. Meanwhile, retail pump prices have dropped in recent weeks to mirror declines in world crude prices, according to the Department of Energy.
The Philippine Statistics Authority will report official inflation data on March 5. The central bank expects full-year inflation at 3 percent, following a 2.5 percent average in 2019.
Economists said the latest inflation trend remains “manageable,” but will likely inspire the BSP to trim interest rates anew as soon as March.
Union Bank of the Philippines Chief Economist Ruben Carlo Asuncion said inflation may have dipped to 2.8 percent for February, with a softer trend seen as the global novel coronavirus outbreak affects consumer behavior.
“People are really wary about public places and convergence of people. The lesser the people, the better. As a result, general consumption of goods and services tend to be lower and slower, which will have a direct impact on firms that produce these goods and services,” Asuncion said in a note sent to reporters.
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Michael Ricafort, economist at the Rizal Commercial Banking Corporation, pegged February inflation at 3.1 percent. He said this could be the central bank’s basis to reduce benchmark yields as a “pre-emptive measure to counter any adverse effects of the noval coronavirus in terms of the slower global/local economic growth.”
The BSP trimmed interest rates by 25 basis points during their February 6 review.
