Slower price adjustments in both food and non-food items pulled down inflation to 1.3 percent in January 2016 from 1.5 percent in the previous month, according to the National Economic and Development Authority (NEDA).

Inflation for the food subgroup slowed down as prices of fish, fruits, vegetables, milk, cheese, and eggs became stable.

“Good weather conditions at the onset of 2016 allowed prices of these food items to stabilize. This was an improvement from the previous month when Typhoon Nona pushed up prices due to hampered production, transport, and delivery of agricultural products in the affected areas,” said Socioeconomic Planning Secretary Emmanuel F. Esguerra.

The January 2016 inflation of 1.3 percent was within the Bangko Sentral ng Pilipinas forecast of 0.8-1.6 percent for the period, and exactly the same as the median forecast of 1.3 percent. This also remained lower than the 2.4 percent inflation rate in January 2015.

Inflation in non-food items also slowed down across all commodity groups, especially in transport.

“Domestic prices of petrol – gasoline, liquefied petroleum gas, diesel, and gasoline – continued to go down. This was still due to persistent global oversupply and record stockpile of crude oil which weakened prices of Dubai oil, Brent, and West Texas Intermediate (WTI),” said Esguerra, who is also the NEDA Director-General.

Price reduction in electricity, gas, and other fuels also continued on account of lower generation cost, although at a slower pace than in December 2015, due to increased transmission charges.

Core inflation, which excludes volatile prices of energy and food, likewise eased to 1.8 percent in January 2016 from 2.1 percent in the previous month.

“But for the first few months of 2016, risk of higher food prices remain. While it is noted that El Niño will gradually weaken beginning next month, the onset of the summer season may constrain farm output,” said Esguerra.

“Guided by the Roadmap for Addressing the Impact of El Niño or RAIN, accurate determination of food import requirements to avoid supply disruptions is important to keep inflation stable in the coming months,” he added.

From a global perspective, Esguerra said that given the expectation of a prolonged period of low oil prices, the government needs to prepare for potential negative impacts on the economies of oil-producing countries.

“Such developments could adversely affect overseas Filipino workers as the governments of the said economies implement austerity measures, cut back on subsidies, postpone infrastructure outlays, and raise taxes. The government should actively extend assistance to displaced workers, including re-training, livelihood, re-integration or placement services,” he said.