MANILA, Philippines (3rd UPDATE) – After 11 months of settling above the government's target band, inflation finally slowed down to 3.8% in February, the Philippine Statistics Authority (PSA) announced on Tuesday, March 5.
The government aimed to keep the inflation rate within 2% to 4% – a range which analysts said was desirable for developing economies – but failed to do so in 2018.
The PSA said the lower inflation figure was due to the slower annual increases in food and non-alcoholic beverages at 4.7%.
Annual gains were also slower in other commodity groups, except for communication expenses, which remained at 0.4%, while education decelerated by 3.8%.
The BSP said inflation has been easing due to lower oil prices in the world market and the strengthening of the peso.
The central bank earlier said the harvest season and arrival of rice imports also helped tame prices.
Inflation in Metro Manila slowed down to 3.8%, the lowest recorded in the last 18 months. All other regions also exhibited slower inflation rates. (READ: EXPLAINER: How inflation affects you)
In a joint statement, the National Economic and Development Authority, Department of Finance, and Department of Budget and Management said they see prices further easing and remaining within the manageable range all throughout the year.
The agencies also estimated that the recent enactment of the rice tariffication law would cut inflation by 0.5 to 0.7 percentage points this year and 0.3 to 0.4 percentage points next year. (READ: FAST FACTS: How government will implement rice tariffication)
"While we constantly keep a close watch on the general prices of goods, we can now pay greater attention to programs that will further propel economic growth and help us reach our long-term development goals," the joint statement read.
Malacañang backed the economic managers and assured Filipinos that they will keep an eye on prices of goods.
"We expect further improvement and disinflation as we continue to remain vigilant in monitoring the prices of basic goods used by ordinary Filipino consumers," said Chief Presidential Legal Counsel and Presidential Spokesperson Salvador Panelo in a statement on Tuesday.
Still on guard
While the slowdown of inflation came as a welcome development for the government's economic team, threats beyond policy reforms remain.
Around 19 areas are expected to experience drought this year, including Metro Manila. (READ: Zamboanga City under state of calamity due to dry spell)
"The government must take proactive measures to mitigate its adverse impacts on the agriculture sector in the immediate term and to increase its resiliency against extreme weather conditions over the medium to long term," the joint statement read.
They also said they will continue to observe developments in the global oil market.
While oil prices are lower now compared to a year ago, companies have been hiking pump prices almost on a weekly basis in 2019.
Inflation hit a 9-year high of 6.7% in September and October 2018, bringing last year's average to 5.2%.