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February Inflation Decelerates Further to 2.7 Percent

03.06.2012

Year-on-year headline inflation slowed down further to 2.7 percent in February from    4.0 percent (revised) in January using the 2006-based CPI series. The year-to-date average of  3.3 percent was within the Government’s inflation target range of 3-5 percent for 2012 and the BSP’s internal monthly forecast of 2.7-3.6 percent.

The lower February inflation outturn was due mainly to slower increases in the prices of key food items, particularly rice, vegetables, fruits, fish, sugar, oil and fats as supply remained adequate. Meanwhile, higher inflation for electricity, gas and other fuels due to upward adjustments in the prices of liquefied petroleum gas (LPG) and kerosene, as well as higher charges for electricity rates led to the marginal rise in non-food inflation. The increases in gasoline and diesel prices also pushed up transport inflation.

The latest inflation readings affirm the BSP’s assessment of a manageable inflation outlook over the policy horizon, during which average inflation is expected to settle well within the 3-5 percent target range. The BSP will continue to keep a close watch on emerging developments on both the domestic and global fronts to ensure that monetary policy settings remain consistent with the price stability objective while being supportive of domestic economic activity.

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