Philippine inflation slows more than expected in February as rice prices drop

{A worker carries on his head a sack of rice inside a government rice warehouse National Food Authority in Quezon city, Metro Manila in Philippines, August 9, 2018. Picture taken August 9, 2018. (Reuters/Erik De Castro/File Photo)

MANILA — Philippines‘ annual inflation eased more than expected in February, driven largely by slower increases in food and utility costs, the statistics agency said on Wednesday, likely giving the central bank room to resume cutting interest rates.

READ: Philippine inflation at 2.1% in February

The consumer price index (CPI) PHCPI=ECI rose 2.1% in February, coming in below the 2.6% median forecast in a Reuters poll and the previous month’s 2.9% rate.

Last month’s print, which fell closer to the low end of the central bank’s 2.0% to 4.0% target, marks the slowest annual increase since September, when inflation stood at 1.9%.

The Philippine central bank unexpectedly kept its key interest rate steady in February after three consecutive 25-basis-point cuts in previous reviews, citing uncertainties over global trade policies, but said it remained on an easing cycle.

“More benign inflation near the lower end of the central bank’s inflation target would support monetary easing, possible 25 basis points rate cut as early as the April meeting,” Michael Ricafort, chief economist at RCBC bank, said on social media website X.

Core inflation, which excludes volatile food and energy prices, also eased to 2.4% in February, down from 2.6% in January.

Food inflation saw a notable slowdown, easing to 2.6% in February from 4.0% in January. That was driven by a 4.9% drop in rice inflation, the steepest decline since April 2020, when prices of the national staple fell by 5.7%.

The Philippines, among the world’s largest rice importers, declared a food security emergency last month to bring down the cost of rice, which it said has stayed elevated despite lower global prices and a reduction in rice tariffs in 2024.

—Reporting by Mikhail Flores and Karen Lema; Editing by John Mair and Christian Schmollinger