Inflation grows at fastest pace in over three years

CONSUMER prices rose at its fastest rate in more than three years in February, on the back of increased prices in food and non-alcoholic beverages, and the double-digit increase in “sin” products, the Philippine Statistics Authority (PSA) said this morning.

Overall inflation rose in February by 4.5% year-on-year based on 2006 prices, faster than the previous month’s 4% increase, PSA said.

The February print was also the fastest since September 2014’s 4.4% and overshoot the Bangko Sentral ng Pilipinas (BSP)’s 2-4% target for the year, albeit within the 4.-4.8% estimate range given by the BSP’s Department of Economic Research.

By using the new 2012-rebased index, inflation stood at 3.9% in February, also fastest in more than three years since the same September 2014’s 3.9% rate, PSA said.

“The elevated February inflation figure is in line with our updated forecast for a temporarily higher inflation than target range in 2018 due to transitory factors,” BSP Governor Nestor A. Espenilla, Jr. said in a text message to reporters.

“The operative word is temporary. How temporary is temporary is what needs careful analysis.”

“Also, let’s not forget that monetary policy operates with a long lag. Whatever monetary policy action we do now, will more likely be felt in 2019 and beyond rather than 2018. That’s why we don’t necessarily react to Feb 2018 but must look much further ahead and rely on forecasts.”

The acceleration was led by the faster annual gain recorded in the heavily weighted food and non-alcoholic beverages index at 4.9% (based on 2006 prices), likewise, food alone index rose by 4.9%,the report said.

Double-digit increase in alcoholic beverages and tobacco index at 17.1% also contributed to the increase in overall prices last February.

Excluding the volatile food and energy prices, the core index for consumer prices registered an increase of 4.4%.

For National Capital Region, overall price increases was recorded at 5.6% for the month of February. — Ranier Olson R. Reusora with a report from Melissa Luz T. Lopez