INFLATION EASES IN FEBRUARY ‘14

MANILA—Headline inflation slid by a tad in February on slower price increase of alcohol, tobacco and petroleum prices and a relatively stable cost of food items, the National Economic and Development Authority (NEDA) said.

This is based on the report of the Philippine Statistics Authority (PSA) that headline inflation eased to 4.1 percent last month, lower than the 4.2 percent in January.

“Slower inflation in alcoholic beverages, tobacco and local petroleum prices offset faster price hikes in electricity and some food products in February,” Economic Planning Secretary Arsenio M. Balisacan said.

PSA data show a month-on-month deceleration in inflation rates of alcoholic beverages and tobacco (7.1% in February 2014 from 17.6 percent in January 2014) and transport (1.0% from 1.2%).

The food and non-alcoholic beverages category recorded a stable inflation rate of 5.5 percent on slower growth in the price index of non-alcoholic beverages during the period.

However, February inflation was higher than the 3.4 percent in the same period a year ago.

Rice prices continued their uptrend due to tight domestic supply. Based on the report of the PSA, the total rice stock inventory, which includes commercial warehouses, households and National Food Authority depositories, as of the start of 2014 was lower relative to the previous month.

“The supply outlook for rice, however, in the coming months is quite favorable suggesting that prices may be on the way down,” Balisacan, who is also NEDA Director-General, said.

The rise in food prices  was somewhat moderated by the dissipated impact of sin tax reform law that resulted in significant slowdown in inflation of tobacco (7.1% in February 2014 from 24.8% in February 2013) and alcoholic beverages (6.7% from 9.4%).

This, combined with decelerated price hikes in fuel products, helped reduce the effect of higher electricity rates on the non-food group. In February 2014, the generation charge of MERALCO increased by 5.6 percent or PhP0.29/kWh y-o-y, a rebound from a 2.1 percent y-o-y contraction in the previous month.

NEDA expects full-year inflation to average around 4.4 percent, still well within the Development Budget Coordination Committee target of 3.0 to 5.0 percent. Year-to-date headline inflation is at 4.2 percent.

Meanwhile, inflation in areas outside Metro Manila slightly eased to 4.5 percent in February 2014 from 4.6 percent in January 2014, albeit higher compared to 3.7 percent a year ago. Growth rate of prices in areas within the metro reached 2.8 percent last month, faster than 2.7 percent in January and 2.3 percent a year ago.

Among the ASEAN-5 countries, the February 2014 headline inflation eased in the Philippines and Indonesia, but rose slightly faster in Thailand. In January 2014, inflation in Singapore slid while that in Malaysia inched up.