THE Philippine Statistics Authority (PSA) reported on Thursday that inflation eased in February, but a local economist said this is not necessarily favorable for the country in view of the outbreak of the coronavirus disease 2019 (COVID-19).
The PSA reported that the inflation rate eased to 2.6 percent in February, from 3.8 percent last year and the 2.9 percent recorded in January.
However, Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang noted that the latest inflation data showed that components exhibited slower price increases, indicating a weakening of demand.
“I’ve checked the latest inflation data and there were declines all over. [This] suggests a fall in demand. [This may mean that] consumption slowed in the first quarter,” said Ang. Consumption spending is crucial for a country like the Philippines as 70 percent of its GDP relies on household and government consumption.
One “positive thing” about the latest inflation data, said Ang, is that the Bangko Sentral ng Pilipinas (BSP) has more room to cut interest rates.
The Monetary Board will hold its policy meeting on March 19. The BSP had earlier given assurances that developments, such as the inflation print, will be taken into consideration when it makes its decision.
“This is good for monetary policy but bad generally,” Ang said. “Even commodities that were expected to show an increase like meat and health expenditures did not reflect [the expected increase].”
Optimism
Socioeconomic Planning Secretary Ernesto M. Pernia said commodity prices could still increase in the coming months, due to the continuous spread of African swine fever (ASF), thinning supply of Thai rice, and the ongoing COVID-19 outbreak.
Pernia said the possible delay in the arrival of imported products due to production and logistics disruptions could also cause commodity prices to rise faster.
“We also need to closely monitor other developments particularly those that may cause disruptions in the global supply chains due to the spread of COVID-19,” Pernia said.
“We call on our colleagues in the government, both in the national and local levels, to stand ready in effectively managing the demand and supply of key agricultural commodities which will possibly be affected by these risks,” he added.
The latest PSA data brings year-to-date inflation to 2.8 percent, within the government’s target range of 2 to 4 percent for the year.
PSA Assistant Secretary Lourdines C. Dela Cruz noted the slower price increases in Transportation at 1.2 percent, from 13 percent in January; and alcoholic beverages and tobacco, 23.4 percent from 25.3 percent.
The top contributor in February remained the heavily weighted food and nonalcoholic beverages. It posted an annual increase of 2.1 percent and accounted for 33.2 percent of the inflation print.
Other top contributors to overall inflation were housing, water, electricity, gas, and other fuels and restaurant and miscellaneous goods and services.
Consumer price increases in the National Capital Region (NCR) slowed to 2 percent in February, from last year’s 3.8 percent. The figure is also lower than the 2.7 percnt recorded in January.
Data showed inflation in Areas Outside of NCR (AONCR) eased to 2.8 percent last month, from last year’s 3.8 percent and 3 percent in January.
The Bicol region recorded the highest inflation rate in the Philippines at 3.6 percent, but the figure is lower than the 3.9 percent posted in January.
Consumer price increases were slowest in Eastern Visayas at 1.9 percent. The figure is also lower than the 2 percent seen in January.
Image credits: Nonie Reyes