By Melissa Luz T. Lopez
INFLATION likely eased further in February, the Bangko Sentral ng Pilipinas (BSP) said on Thursday, citing chances that the overall increase in prices of widely used goods fell below four percent as rice prices dropped.
In a statement, the BSP’s Department of Economic Research gave a 3.7-4.5% estimate for last month’s overall price increases, with hints that inflation could sustain its downtrend for the fourth straight month coming from January’s 4.4% reading.
The Philippine Statistics Authority (PSA) will release official inflation data on Tuesday. Inflation settled at 3.8% in February 2018.
The central bank unit said higher electricity and oil costs may have pushed up prices overall last month. Power distributor Manila Electric Co. said utility rates would rise by P0.5682 per kilowatt-hour to cover higher generation charges. At the same time, retail fuel pump prices also rose in all four weeks of February to reflect world crude price movements as oil-producing countries agreed on fresh supply cuts.
“These may be partly offset by lower prices of rice and other agricultural commodities given the appreciation of the peso and ample supply, particularly of rice, following the recent harvest and arrival of rice imports,” the BSP said.
PSA data show a sustained decline in palay and rice prices as of the second week of February.
President Rodrigo R. Duterte signed on Feb. 14 the Rice Tariffication Act which replaced import limits for the staple with tariffs: 35% for rice coming from within the Association of Southeast Asian Nations (ASEAN); 40% for imports within the 350,000 metric-ton minimum access volume (MAV), regardless of country; and 180% for above-MAV imports from non-ASEAN countries.
Economic managers and the BSP are counting on the relaxed importation rules, which take effect March 5, to slash retail prices of the staple by up to P7 per kilogram and inflation by 0.7-0.8 percentage point.
On the other hand, the peso continued to strengthen against the dollar, returning to the P51:$1 level in the last two days of the month.
The central bank said it will “continue to be watchful of evolving price trends” and ensure that policy settings will help maintain price stability.
From a 5.2% average in 2018, the central bank expects inflation to ease to 3.1% this year, taking the rate back to the 2-4% target. Inflation is seen to return to below four percent as early as March, BSP Assistant Governor Francisco G. Dakila, Jr. had said after the Feb. 7 policy meeting of the Monetary Board.