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Headline Inflation Rises in February


Year-on-Year headline inflation increased to 3.9 percent in February from 3.4 percent in January using the 2012-based Consumer Price Index (CPI) series. The year-to-date average of  3.7 percent using the 2012-based basket was within the Government’s announced inflation target range of 3.0 percent ± 1.0 percentage point for 2018. Likewise, month-on-month seasonally-adjusted headline inflation also increased to 0.8 percent in February from 0.7 percent in the previous month based on the 2012 CPI series.

Using the 2006-based CPI series, year-on-year headline inflation also rose to 4.5 percent in February from 4.0 percent in the previous month. This brought the year-to-date average to   4.2 percent, which is above the Government’s inflation target of 2-4 percent for the year.  Meanwhile, core inflation—which excludes certain volatile food and energy items as a means to depict underlying price pressures—increased to 4.4 percent from 3.9 percent in the previous month using the 2006-based CPI series. According to the PSA, the 2006 based CPI series will be released alongside the new 2012-based series until June 2018. Statistical authorities are also reviewing the definition of core inflation in the context of the new series.

The higher inflation outturn in February was traced mainly to faster price increases of selected food and non-food items. In particular, prices of corn, meat, fruits, as well as milk, cheese, and eggs rose while rice prices went up during the month due to the end of the main harvest season. Meanwhile, year-on-year fish inflation remained elevated in February owing to some tightness in domestic supply with the fishing ban in the Visayas area. At the same time, upward adjustments in domestic pump prices of gasoline and diesel also led to higher transport inflation during the month.

Governor Nestor A. Espenilla, Jr. noted that the elevated February inflation reading is in line with the BSP’s assessment of inflation trending upward in 2018 as a result of transitory factors. Based on the 2012-based CPI index, however, inflation is projected to be within target for 2018. At the same time, inflation is expected to decelerate back to within the target range in 2019 whether based on the 2006- or the 2012-based CPI index. Nevertheless, the BSP will continue to closely monitor the developments and factor in all relevant data in reviewing the monetary policy stance.

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