MANILA – Ample supply of key food items and lower petroleum prices and electricity rates pulled down inflation to 2.4 percent in January 2015 from 2.7 percent in December 2014, according to the National Economic and Development Authority (NEDA).

“The lower inflation out-turn in the first month of 2015 bodes well for consumption growth. It is aligned with market expectations given the consensus forecast of 2.4 percent for the same period. It is also within the medium-term inflation target set at 2.0 to 4.0 percent for the year by the Development Budget Coordination Committee,” said Economic Planning Secretary Arsenio M. Balisacan.

“There were no new major economic and weather shocks that could considerably affect food supply. The supply chain of other food products has normalized because of the lifting of the expanded truck ban in September 2014. So these may have also contributed to the continued easing of inflation,” the Cabinet official added.

Rice prices, which account for 38 percent of total food inflation, continued to ease their year-on-year growth in January 2015.

“Although the prices of rice are still elevated, the rate of price increase was slower because of more favorable supply conditions. Total rice stock inventory continues to register a double-digit year-on-year growth as of December 2014. This is in contrast to the decline in inventory recorded prior to November 2014,” said Balisacan, who is also NEDA Director-General.

He added that the favorable outlook on the production of agricultural commodities should further ease local price pressures in the coming months. The shift in the rice harvest period from December 2014 to January 2015 in some provinces is seen to boost production in the first quarter of 2015. Reports also indicate that the National Food Authority will import an additional 600,000 tonnes of rice in the coming months to boost stocks in 2015.

Moreover, significant rollbacks in the domestic pump prices of unleaded gasoline, diesel, kerosene and Liquefied Petroleum Gas or LPG were still recorded in January 2015. Since the last quarter of 2014, international oil prices have slid remarkably due to rising global oil supply and sluggish oil demand due to the weak global recovery.

“The continuing decline in international oil prices is a positive development for the country considering our import dependence in oil,” he said.

Electricity rates also declined in January 2015 due to lower generation charges, improved power plant availability, and lower cost of fuel. MERALCO charges were down anew by 17 percent year-on-year or by PhP0.219 per kilowatt hour.

Balisacan stressed that, overall, policies remain supportive of a manageable rate of inflation.

“The expected the monetary policy adjustments in the US and the general concerns about the sustainability of growth in emerging economies, the peso is expected to remain relatively stable due to the country’s strong external position will contribute to stable domestic prices going forward,” he said.

But Balisacan said that the government is aware that there are still risks to a manageable inflation rate. “The lingering possibility of El Niño occurrence in the first quarter of 2015 and power woes remain an overhanging concern and must be holistically addressed,” he added.