Philippines: Inflation jumps in February
March 4, 2011
In February, consumer prices added 1.06% over the previous month, following on a 0.83% increase registered in January. The monthly price rise mainly reflected increasing fuel costs (+2.02% month-on-month) as well as higher food prices (+1.23% mom). As a result of the substantial monthly price increase, annual headline inflation jumped from 3.6% in January to 4.3% in February, exceeding market analyst expectations of 3.7%. Moreover, the annual core inflation rate, which excludes the price volatility associated with items such as oil and food, picked up from 3.3% in January to 3.5% in February. Annual average inflation, which is the reference rate used by the Central Bank to conduct monetary policy, increased by a benign 0.1 percentage points and settled at 3.8% in February. Nevertheless, annual average inflation remained below the target rate of 4.0% (1% tolerance margin), set by the Bank for 2011. Although inflationary pressures continue to mount, the Central Bank left interest rates unchanged at a record low of 4.00% at its latest meeting held on 10 February. The next meeting is due to be held on 24 March.