February inflation quickened to 3.4% y/y

The Philippine Statistics Authority (PSA) [link] said that Philippine inflation for February quickened to 3.4% y/y, up from January’s 2.8% y/y increase. Month-on-month, the consumer price index data increased 0.56% from P124.8 in January to P125.5 in February.

The PSA said the main drivers of the increase were the y/y increases in food and non-alcoholic beverages, plus an increase in the cost of transportation, housing, water, electricity,  and gas. Core inflation (excluding certain food and energy items) slowed to 3.6% in February, down from 3.8% in January.

This marks the first monthly acceleration in inflation after four consecutive months of deceleration. There were many interesting responses to this data, and I’ll quickly summarize them here:

> The BSP: Our central bank, the Bangko Sentral ng Pilipinas (BSP) [link], said that the 3.4% February inflation figure was “within the BSP’s forecast range of 2.8 to 3.6 percent,” but that inflation figures going forward could accelerate beyond the BSP’s target range as we lose the benefit of the “negative base effects” we experienced in Q1.

The BSP also warned about the “adverse impact” of El Niño, and about the combined impact of that weather phenomenon and “positive base effects”. The BSP said that it would be “appropriate to keep the BSP’s monetary policy settings unchanged in the near term”.

> The NEDA: The National Economic and Development Authority (NEDA) [link] issued a statement to warn that the “potential impact of a strong El Niño weather pattern on food prices is a significant concern for our community.” NEDA noted that the government is “intensifying its efforts” to mitigate the impact of El Niño on food prices.