MANILA, Philippines - Consumer prices climbed to their highest level in five months, the National Statistics Office (NSO) reported yesterday, but the Bangko Sentral ng Pilipinas (BSP) said that inflation remains manageable, suggesting interest rates will be left on hold in the near term.
Annual inflation picked up more than expected in February to 3.4 percent, the fastest since September last year, bringing the average inflation in the first two months of the year to 3.2 percent, near the bottom of the central bank’s three- to five-percent target range.
“This reflects that inflation remains manageable,†BSP Governor Amando M. Tetangco told reporters in a mobile phone message.
Inflation on a month-on-month basis eased to 0.3 percent in February from 0.5 percent in January, while core inflation, which strips out volatile food and energy prices, quickened to 3.8 percent last month from January’s 3.6 percent, the government statistics office said.
Despite a faster inflation rate in February, the central bank is expected to leave interest rates on hold at its March 14 meeting, as price rises remain in a targeted range this year.
“BSP will continue to monitor developments, including any petitions for any utility rates and wages on the domestic front as well as any shifts in global economic growth dynamics that could impact international commodity prices,†Tetangco said.
In its report, the NSO noted faster increases in five commodity groups namely: food and non-alcoholic beverages (2.9 percent), alcoholic beverages and tobacco (29 percent), furnishing (five percent), recreation and culture (0.7 percent) and communication (2.2 percent).
These were offset by slower increments in prices of utilities (2.6 percent), clothing and footwear (4.8 percent), health (3.2 percent) and transport (one percent) subindices, data showed.
By region, the National Capital Region experienced slower price uptick of 2.3 percent than the rest of the country, at 3.7 percent.
Emilio Neri Jr., lead economist of the Bank of the Philippine Islands, said “price increases were driven largely by upticks in petroleum prices†although this is not seen to persist in the coming months.
“Our own assessment shows that headline inflation is likely to stay below the lower half of the target range throughout most of 2013, with one or two monthly episodes of above four percent prints,†he explained.
Prakriti Sofat, regional economist at Barclays, said the February inflation would not likely push BSP to act during its next policy meeting on March 14.
Monetary officials kept policy rates at record-lows of 3.5 percent and 5.5 percent during its first policy meeting for the year last Jan. 24. They however cut to three percent the rate charged on the special deposit account (SDA) facility.
“The acceleration of inflation in February will likely motivate the central bank to keep main policy rates as well as the SDA rates on hold,†Nguyen said in a separate research note.