Philippine CPI Steady, But Central Bank Sees Inflation Risks

INFLATION - MANILA. Philippine annual inflation held steady at a 16-month low in February as higher energy costs were offset by lower prices of some food items, as the central bank warned of rising inflationary risks tied to the Russia-Ukraine conflict.

The Consumer Price Index rose 3.0% last month from a year earlier, the same pace recorded in January, the statistics agency said on Friday.

The headline figure came in under the 3.2% median forecast in a Reuters poll and was near the low end of the central bank's projected range of 2.8% to 3.6% for the month.

The Philippine Statistics Authority said it would start releasing core inflation figures in May, calculated using a new 2018 base year.

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Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said inflation will likely accelerate in the near term due to higher oil prices as well as the impact of positive base effects.

"The BSP will continue to closely monitor the emerging risks to the outlook for inflation and remain vigilant against possible second-round effects from supply-side pressures or any shifts in inflationary expectations," he said in a statement.

The BSP has kept interest rates steady at a record low since November 2020 to maintain support for the economy's recovery from a pandemic-driven slump.

The BSP has "a wide arsenal" of policy instruments to respond to any possible adverse impact from external shocks, Diokno said.

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Diokno has said the BSP would not necessarily follow the U.S. central bank's expected tightening starting this month.

The BSP was likely to wait until the end of the year before raising interest rates, according to a Feb. 1-14 Reuters poll of economists. But some economists believe a rate hike could come earlier.

"The BSP may need to assess the impact of soaring energy prices on inflation expectations," said Nicholas Mapa, a senior economist at ING.