Inflation rate slowed down to 1.3 percent in January, on ample food supply and lower cost of fuel and electricity, the Philippine Statistics Authority said Friday.
Latest PSA data showed inflation in January slowed down from 1.5 percent registered in December and 2.4 percent in January 2014. The January figure was within Bangko Sentral ng Pilipinas’ forecast of 0.8 percent to 1.6 percent for the month, but was below the target of 2 percent to 4 percent for the year.
The National Economic and Development Authority said the slower price adjustments in both food and non-food items led to the softer inflation.
“Good weather conditions at the onset of 2016 allowed prices of these food items to stabilize. This was an improvement from the previous month when typhoon Nona pushed up prices due to hampered production, transport and delivery of agricultural products in the affected areas,” said Economic Planning Secretary Emmanuel Esguerra.
Neda said inflation in non-food items also slowed down across all commodity groups, particularly in transportation.
“Domestic prices of petrol – gasoline, liquefied petroleum gas, diesel and gasoline – continued to go down. This was still due to persistent global oversupply and record stockpile of crude oil which weakened prices of Dubai oil, Brent, and West Texas Intermediate,” said Esguerra.
Bangko Sentral Governor Amando Tetangco Jr. said inflation was expected to accelerate in the coming months, on the impact of El Niño dry spell on agricultural products and higher power rates.
“Our view remains to be that monthly inflation will slowly rise to within the target range for 2016 and 2017. Upside risks continue to emanate from a stronger-than-expected El Nino and potential adjustments in electricity rates given pending petitions,” Tetangco said in a text message.
“We will continue to monitor other developments, including hints of even slower global growth and more volatility in financial and commodity markets, to see if the balance of risks is tilting such that there is need for adjustment in policy stance,” Tetangco said.
ING Bank economist Joey Cuyegkeng said he also expected inflation to pick up in the coming months. “The softer January inflation print is temporary. Inflation is likely to resume its gradual rise in the coming months despite the low crude oil prices,” Cuyegkeng said in an email.
“In the near term, El Niño’s impact on prices would be increasingly felt while second half price pressures could come about from a recovery in global commodity prices and domestic demand pull pressures,” he said.
Standard Chartered economist Jeff Ng also expected inflation to rise. “We expect a gradual pick up. Oil prices will be a factor but also important to consider food inflation as well. Food inflation for now remains stable,” Ng said. With Julito G. Rada
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