Philippine inflation quickens further as food costs soar; picks up to 4.7% in February, highest since January 2019

A registered teacher wearing a face mask and shield against Covid-19, gestures in front of a computer as she and dozens other teachers conduct a teleconferencing with stuggling students helping them in their school lessons through online distant learning at a local government-sanctioned online tutorial class in Taguig City, south of Manila on March 3,2021. - AFP

MANILA, March 5 (Bloomberg): Inflation in the Philippines continues to gather pace even as the economy struggles to pull itself out of recession.

Consumer prices rose 4.7% in February from a year earlier, the statistics agency reported Friday.

That’s the fastest pace since December 2018, according to data compiled by Bloomberg, and matched the median forecast in a survey of 21 analysts.

Higher prices of food and beverages, particularly meat, drove the increase, national statistician Claire Dennis Mapa said in a live-streamed briefing.

Faster consumer-price gains are entrenching the nation’s real interest rate in negative territory. However, central bank Governor Benjamin Diokno, who has said the benchmark interest rate will remain unchanged in coming months, reiterated Thursday that quicker price gains don’t require monetary action yet.

Policy makers see inflation remaining elevated in the first half of the year, but say it should taper off by the second half and come in at the top end of the bank’s 2%-4% target range for 2021.

Bangko Sentral ng Pilipinas kept its key rate steady at 2% last month to support an economy that has been among the hardest hit in the region by the pandemic, and the slowest to begin recovering. MUFG Bank Ltd. analysts led by Derek Halpenny wrote that any unwinding of accommodative steps the central bank took in the pandemic may first aim at normalizing liquidity levels rather than raising the benchmark rate.

Policy makers next meet on rates March 25.

For the record, Year-on-year headline inflation in the Philippines accelerated to 4.7 per cent in February 2021, up from 4.2 percent in January 2021, driven by increases in food and non-alcoholic beverages, the Philippine Statistics Authority (PSA) said on Friday (March 5), Xinhua reported.

"This is the highest inflation posted since January 2019," PSA head Dennis Mapa said in an online press conference.

Inflation in February 2020 stood at 2.6 per cent.

Mapa said the 6.7 per cent uptick in the inflation of the heavily-weighted food and non-alcoholic beverages during the month, from 6.1 percent in January 2021, mainly contributed to the uptrend in February inflation.

Excluding selected food and energy items, Mapa said the core inflation increased to 3.5 percent in February 2021, from 3.4 per cent in January 2021.

Core inflation in February 2020 posted at 3.2 per cent.
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