The continuous decline in global oil prices and slower price increase in food items slowed inflation at 0.9 percent in February 2016 from 1.3 percent in the previous month, according to the National Economic and Development Authority (NEDA).
This low inflation was largely due to downward price movements in transport, and electricity, gas and other fuels and slower increases in the prices of food and non-alcoholic beverages, clothing and footwear, among others.
“The persistent global oversupply and record stockpile levels of crude oil contributed to this softer inflation, as prices of Dubai oil, Brent and West Texas Intermediate continued to weaken in January 2016,” said Socioeconomic Planning Secretary Emmanuel F. Esguerra.
As of February 2016, domestic petrol prices displayed downward price adjustments based on figures in the same month in 2015: gasoline (-10.4%); liquefied petroleum gas (-11.7%); diesel (-26.4%), and kerosene (-22.6%).
Inflation in food items was also slower due to ample supply conditions. Slower upward price adjustments were observed in fish, other cereals, flour, cereal preparation, bread, pasta and other bakery products, milk, cheese and eggs, fruits, and vegetables.
“The implementation of programs related to mitigating the impact of El Niño such as cloud seeding operations, installation of alternative irrigation systems, crop rotation, the use of hybrid crop varieties, and other government assistance for farmers, helped ease price pressures on food,” said Esguerra, who is also NEDA Director General.
Core inflation, which excludes volatile prices of energy and food, likewise eased to 1.5 percent in February 2016 from 1.8 percent in the previous month.
“This low inflation environment is likely to continue as external downward pressures remain. Notably, global oil prices are expected to be lower by 27 percent on average in 2016,” the Cabinet official said.
Esguerra warned of the potential negative impacts of continued decline in global oil prices on some categories of overseas Filipino workers such as those engaged in oil exploration, construction, and clerical services.
“Given these developments, oil-producing countries may implement austerity measures, cut back on subsidies, postpone infrastructure outlays, and impose higher taxes. Thus, the government should strengthen its ability to identify displaced workers and actively extend assistance by facilitating employment opportunities or placement services, re-training, providing livelihood, and/or re-integration,” he said..
On the domestic front, while El Niño is expected to gradually weaken starting this month, upward price pressures in food are expected due to the onset of the summer season.
“Appropriate timing of rice importation remains critical to avoid supply disruptions which could result in unstable rice prices,” Esguerra said.
“It is also important to implement energy efficiency programs to ensure that inflationary pressures coming from power shortages are tempered,” he added.