Inflation eases in February — BSP

MANILA, Philippines — Inflation likely eased this month after accelerating for the third straight month in January, according to the Bangko Sentral ng Pilipinas (BSP).

The BSP’s Department of Economic Research said February inflation likely ranged from 2.4 to 3.2 percent as lower prices of petroleum products, electricity, rice and other food products likely tempered price pressures.

Inflation quickened for the third straight month to 2.9 percent in January from 2.5 percent in December. This was the fastest in eight months or since inflation hit 3.2 percent in May last year.

 Looking ahead, the BSP will remain watchful of economic and financial developments to ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,”  the Department of Economic Research said in a statement.

BSP Governor Benjamin Diokno told participants of the 17th Professional Insurance and Financial Advisors Association of the Philippines (PIFAAP) inflation expectations continue to be firmly anchored within the target over the policy horizon despite the slight uptick.

“Looking ahead, we expect inflation to gradually rise but remain on a target-consistent path for 2020 and 2021,” Diokno said.

The BSP chief said the risks to the inflation outlook continue to tilt slightly toward the upside in 2020 and toward the downside in 2021.

Upside risks to inflation over the near term, he said, arise mainly from potential upward pressures on food prices owing in part to the African swine fever (ASF) outbreak and tighter international supply of rice.

Likewise, Diokno added there continues to be the burden on the economy posed by the ongoing Taal Volcano eruption and the aftermath of Typhoon Tisoy.

However, he said uncertainty over trade and economic policies in major economies such as the US, China, and Europe continue to put downward pressure on global demand, thus easing upward pressures on prices of some commodities like oil.

Based on its latest assessment, the BSP sees inflation accelerating to three percent this year. The central bank has penned an inflation target of two to four percent.

Diokno said the benign inflation is expected to support consumption demand moving forward.

The benign inflation environment and slower-than-expected gross domestic product (GDP) growth has allowed monetary authorities to pursue an easing cycle.