Inflation in the Philippines for February defied expectations, slowing to a lower-than-anticipated 2.1 percent, according to the Philippine Statistics Authority (PSA). This marked a significant drop from January’s 2.9 percent and was below the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 2.2 percent to 3 percent.
A key factor behind this deceleration was the moderation of food prices, which rose by just 2.6 percent in February compared to 3.8 percent in January. Economic Planning assistant secretary Divina Gracia del Prado noted that government interventions, such as the maximum suggested retail price (SRP) on imported rice, played a critical role in curbing price increases. As rice is a major component of the average Filipino’s spending—accounting for about P9 of every P100 spent—the price stabilization had a notable impact on the overall inflation rate.
“Implementing a maximum suggested retail price for pork could have a similar impact on inflation,” del Prado said, pointing to further policy measures that could ease the pressure on consumer prices.
The PSA’s data also revealed that the cost of housing and utilities slowed to 1.6 percent from 2.2 percent, while the price of restaurant and accommodation services moderated to 2.8 percent from 3.2 percent. These shifts contributed to the inflation rate falling below the market consensus forecast of 2.6 percent.
The inflation rate’s decline is especially significant given the earlier predictions that energy, oil, and key agricultural commodities—such as meat and fish—would keep inflation at higher levels. Notably, core inflation, which excludes volatile food and energy prices, also moderated to 2.4 percent, down from 2.6 percent in January.
This favorable inflationary trend provides the Bangko Sentral ng Pilipinas with room to reconsider its monetary policy. With inflation pressures easing, the central bank may have more leeway to lower interest rates, stimulating economic growth as the country continues its recovery from the pandemic. Lower interest rates typically encourage borrowing by businesses and households, potentially driving further expansion and consumption.
The February inflation figures could thus be a signal of a more stable price environment moving forward, allowing for more accommodative monetary policies that support post-pandemic recovery efforts.
