MANILA, Philippines – Lower food and utility prices after the holiday season likely dampened inflation in January, the chief economist of the Department of Finance said.
Inflation, as measured by the consumer price index (CPI), may slow down to 1.2 percent in January from 1.5 percent in December.
This month’s inflation report will be released Feb. 5. The target for this year is between two and four percent.
“This comes as food prices normalize, fuel prices continue to fall and electricity rate reaches five-year low,” Finance Undersecretary Gil Beltran said in an economic bulletin dated Jan. 25.
The Philippines has benefited from a global oil price slump that continued from last year, pushing down local pump prices and helping boost consumer purchasing power.
As of Jan. 26, local diesel prices have decreased by an average of P3.20 per liter, while gasoline rates dipped P1.60 per liter, Department of Energy data showed.
This came as the Manila Electric Co. slashed its generation charge by 21 centavos this month, translating to P41.30 monthly savings for typical household consuming 200 kilowatt hour.
Based on the CPI, housing and other utility and fuels account for 22.46 percent. The biggest share is held by food at 39 percent.
While forecasting a lower inflation, Beltran said the actual figure could come in higher depending on other adjustments from education and housing rentals.
Nevertheless, he said the country will continue to benefit from low crude prices, giving it an advantage to boost demand and economic growth.
“The period of benign inflation is extended due to low fuel prices. This will enable the country to grow faster and investments to continue rising...,” Beltran pointed out.
“Investors can take advantage of the spike in consumer demand that usually accompanies the election season,” he added.