RP inflation rate is lowest in 3 years

PHILIPPINE NEWS SERVICE — Inflation rate eased to 3.9 percent in January, the slowest in over three years, as prices of most consumer goods and services, except clothing, registered little movement from a year ago.

The National Statistics Office, in its latest Consumer Price Index, said the January inflation was the slowest since October 2003, when it was registered at 3.6 percent.

Headline inflation averaged 6.2 percent in 2006, slowing from 6.7 percent in January to 4.3 percent in December.

The interagency Development Budget Coordination Committee said it expected consumer prices to grow within a range of 4 to 5 percent in 2007.

Economists said the slowing inflation provided room for the adjustment of the policy interest rates of the government.

The London-based think tank Economist Intelligence Unit said the deceleration in inflation rate coupled with the movement in oil prices and peso-dollar exchange rate would most likely encourage the Bangko Sentral ng Pilipinas to cut its policy rates this year.

Lehman Brothers, for one, predicted that the central bank would cut its overnight borrowing rate by 0.75 percentage point from the current 7.5 percent to 6.75 percent by end-2007.

Core inflation, which excludes selected food and energy items, also slowed to 3.9 percent in January from 4.6 percent in December.

However, month-on-month inflation picked up to 0.3 percent in January from 0.1 percent in December, as prices of some heavily weighted food items posted gains last month.

According to the NSO, prices of all commodity groups, except clothing, continued to increase at slower rates in January. Inflation for clothing remained at 3.0 percent, the same rate in December.

Inflation rate for food, beverages and tobacco decelerated to 4.3 percent in January from 4.7 percent in December, with inflation for food alone easing to 4.2 percent from 4.6 percent.

“Compared to their corresponding rates in December, annual price increments in January were slower in all the food groups, except for rice whose annual inflation rate was higher at 1.8 percent from 1.4 percent,” the NSO said.

Year-on-year inflation for housing and repair decelerated to 2.9 percent in January from 3.7 percent in December; fuel, light and water, 4.7 percent from 5.4 percent; services, 3.7 percent from 4.4 percent; and miscellaneous items, 2.4 percent from 2.5 percent.

Services include educational, medical, personal, recreations, transportation and communication and others while miscellaneous items include household furnishing and equipment, household operations, personal care and effects and other miscellaneous items.