MANILA -- An official of the Department of Finance forecasts Philippine inflation to reach 1.4 percent, slightly up from 1.3 percent posted a month ago due to due to supply-side factors on account of the dry spell.
Finance Undersecretary and chief economist Gil Beltran said in DOF's Economic Bulletin that the projected inflation rate for February would be lower than the 2.5 percent recorded in February last year.
Beltran noted that even with the projected uptick on inflation in the second month this year, rate of price increases remained low due mainly to lower oil prices.
He said the government should continue implementing measures to address the impact of the dry spell.
“The DA (Department of Agriculture) will need to adopt innovative strategies like cloud seeding and expanding the irrigation network to shorten the dry spell and avoid harvest shortfalls that could raise prices,” he said.
With inflation seen to remain low, Beltran said the Bangko Sentral ng Pilipinas (BSP) was not expected to change the central bank's key rates yet.
To date, the BSP's overnight borrowing or reverse repurchase (RRP) rate is four percent and the overnight lending or repurchase (RP) rate is at six percent.
These have been maintained since October 2014 and analysts expect these to be adjusted downward as early as the second quarter of this year to address the impact of low oil prices.
Beltran added that the low inflation environment was also seen to remain supportive of the domestic economy's expansion.
The country posted a 5.8 percent growth in 2015, slower than year-ago's 6.1 percent because of lower net exports given the negative external developments.
Amidst the lower full-year growth, the Philippines remains among the strongest in Asia after China, India and Vietnam.*PNA
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