Inflation lower than expected

INFLATION markedly slowed last month on account of lower food prices as well as utility and transport costs, the Philippine Statistics Authority (PSA) reported on Wednesday.

Consumer price growth decelerated to 2.1 percent from January's 2.9 percent, lower than the Bangko Sentral ng Pilipinas' (BSP) 2.2- to 3.0-percent estimate and the 2.6-percent median in a Manila Times poll of economists.

It was the slowest since September's 1.9 percent, when the rate slipped below the central bank's 2.0- to 4.0-percent target.

"The downtrend in the overall inflation in February 2025 was primarily brought about by the slower annual increment of food and nonalcoholic beverages at 2.6 percent in February 2025 from 3.8 percent in the previous month," the PSA said.

Other main contributors were housing, water, electricity, gas and other fuels, where price growth slowed to 1.6 percent from 2.2 percent in the previous month. Transport costs fell by 0.2 percent after rising by 1.1 percent in January.

Food inflation eased to 2.6 percent from 4.0 percent due to substantially slower inflation for vegetables, tubers, plantains, cooking bananas and pulses (7.1 percent from 21.1 percent).

Rice inflation registered a sharper deflation of -4.9 percent from -2.3 percent last month, with prices said to have decreased month on month since July 2024 amid lower international prices and reduced tariffs.

Core inflation, which excludes volatile food and energy items, slowed to 2.4 percent in February from 2.6 percent in the previous month.

Standard Chartered Bank Asia economist Jonathan Koh, however, said the BSP was unlikely to resume cutting interest rates following the February inflation result.

The slowdown does not "necessarily bolster the case for the BSP to cut earlier in April," he said, noting that the "key reason for the pause in Feb[ruary] was external uncertainty."

"We currently expect the BSP to deliver its first rate cut of 25 bps (basis points) for 2025 in June, and then another 25 bps each in August and Q4 (fourth quarter) for a total of 75 bps," he added.

The central bank has said that it would "continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment."

Govt efforts to continue

Meanwhile, Socioeconomic Planning Secretary Arsenio Balisacan said that government efforts to mitigate inflation were working, but added that efforts to shore up food supplies and raise agricultural productivity would continue.

"The government will sustain its efforts to keep inflation low and manageable to protect the purchasing power of Filipinos," he said.

"As we expect six to 13 typhoons to develop from March to August 2025, the Department of Agriculture (DA) will implement the La Niña action plan to restore agricultural productive capacity in areas likely to be affected by continuous rainfall, flooding, and landslides," Balisacan added.

Fuel assistance will also be provided by the DA to farmers to mitigate the impact of rising fuel prices, he said.

"[W]e will not be complacent in addressing causes of commodity price increases, particularly for food, to help uplift the lives of poor and vulnerable Filipino families, especially," Balisacan said.

Malacañang, for its part, said it welcomed the significant inflation slowdown and reiterated that the government would continue to take steps to further ease consumer burdens.

"According to the National Economic and Development Authority, the continued decline in the inflation rate is an indication that the measures taken by the government against so-called inflationary pressures are effective," Palace Press Officer Claire Castro told reporters.

The DA, meanwhile, said it welcomed PSA acknowledgement of initiatives such as a maximum suggested retail price (MSRP) for imported rice and the release of National Food Authority buffer stocks as having helped lower rice prices.

"The slower inflation in February is an affirmation of the DA's strategy to systematically stabilize the supply and prices of agricultural food products," Agriculture Secretary Francisco Tiu Laurel Jr. said.

"We will continue to engage with the various stakeholders in the agriculture sector as we refine our approach to ensuring food security in the country," he added.

Tiu Laurel is scheduled to meet with pork industry players today to discuss the possible implementation of an MSRP to help stabilize market prices.

WITH REPORTS FROM GISELLE P. JORDAN AND CATHERINE S. VALENTE