Lower food prices pull down inflation to 2.4 percent in March 2015

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MANILA– Lower food prices, primarily rice and meat, pulled down headline inflation to 2.4 percent in March 2015 from 2.5 percent in the previous month and from 3.9 percent in March 2014, the National Economic and Development Authority (NEDA) said Tuesday.

“The easing annual growth rate of rice prices was supported by favorable total rice stocks inventory. Food inflation could have been lower if not for the relatively higher prices of vegetables and fish, which is due in part to the likely shift in consumers’ preferences given the onset of the Lenten season,” said Economic Planning Secretary Arsenio M. Balisacan.

He added that the slower upward adjustments in food prices also benefited from the firm commitment of local bread producers to cut down the prices of bread as transportation and production costs declined due to cheaper fuel.

Meanwhile, inflation among non-food items rose slightly to 0.9 percent in March 2015 from 0.6 percent in the previous month, mainly due to softer declines in the price indices of electricity, gas and other fuels price and operation of personal transport equipment.

On the other hand, core inflation, which excludes selected volatile food and energy prices, inched up to 2.7 percent in March 2015 from 2.5 percent in February 2015, albeit slower compared to the 2.

8 percent registered in the same period a year ago. It averaged at 2.5 percent in January to March 2015.

Overall, headline inflation for the first three months of 2015 averaged 2.4 percent, which is still within the inflation target range of 2.0 to 4.0 percent set by the NEDA Board Development Budget Coordination Committee for 2015.

“Inflation remained low and stable in the first three months of the year in line with expectations over the policy horizon, which is likely to support consumption growth,” said Balisacan, who is also NEDA Director-General.

Balisacan noted that a relatively stable peso, given the country’s strong external position on the back of strong remittances, rising BPO (Business Process Outsourcing) earnings and FDI (Foreign Direct Investment) inflows, ample international reserves, and a manageable level of external debt contribute to stable domestic prices.

“The continuing decline in international oil prices is also a positive development for the country considering our dependence on imported oil,” he added.

Inflation in the National Capital Region (NCR) decelerated to 1.

9 percent in March 2015 from 2.2 percent in February 2015 and 2.9 percent in the same period a year ago. This is accounted for by slower inflation in several major commodity groups including food and non-alcoholic beverages. Outside NCR, inflation remained stable at 2.6 percent, slower than the 4.2 percent recorded in the previous year.

“Our overall inflation outlook remains well- anchored as policies continue to be supportive of a stable inflation rate. While the current episode of mild El Niño and power woes still pose risks to inflation, the continuing efforts to ensure that appropriate policy actions are implemented are expected to temper inflationary pressures over the near to medium term,” said Balisacan.