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Inflation slows in Feb. as food prices stabilize

March 5, 2010 7:58pm

Philippine inflation slowed in February as food prices became less volatile, the Bangko Sentral ng Pilipinas (BSP) said on Friday.

The country’s headline inflation fell to 4.2 percent but prices of food and energy items face close monitoring as the El Niño phenomenon is expected to peak this summer season.

“The actual February inflation reading was within the BSP’s forecast for the month of 3.4 percent to 4.5 percent," the BSP said in an official statement on Friday, adding that this year’s February figures were lower than January's 4.3 percent and February last year’s at 7.3 percent.

The BSP attributed the decelerating year-on-year headline inflation to the decreased volatility in prices of food items such as rice, fruits, and vegetables compared to the accelerating inflation of non-food items such as electricity.

“The decline in food price inflation could be attributed to the waning impact of typhoon-related disturbances on food production," the BSP said. “However, on a month-on-month basis, rapid price increases in non-food items (electricity in particular), which outpaced the marginal increase in food prices, fueled the rise in headline inflation relative to the previous month."

The country’s core inflation rate, which excludes food and energy items, rose to 3.6 percent in February from 3 percent in January.

Month-on-month headline inflation likewise rose to 0.4 percent from 0.2 percent in January.

BSP Officer-In-Charge Nestor A. Espenilla, Jr. said that “the latest inflation readings remain consistent with the BSP’s assessment of a continued manageable inflation environment over the policy horizon."

However, with the official start of the summer season and the expected peak of the El Niño phenomenon, food supply, utility rates, and oil prices will be tightly watched for increased volatility.

“Barring unanticipated shocks to prices, inflation is expected to settle within the inflation targets of 4.5 ± 1.0 percentage point for 2010 and 4.0 ± 1.0 percentage point for 2011," the BSP said. - RJAB Jr., GMANews.TV
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