January inflation eases to 4.3%

CONSUMER prices slowed to a five-month low in January after prices of major commodity groups eased, the government reported Friday.

The headline inflation rate decelerated to 4.3 percent in January from a year earlier, below market and central bank estimates.

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The January rate was within the 2010 target range of the Development Budget Coordination Committee’s 3.5 percent to 5.5 percent. Last September 2009, inflation was recorded at 0.7 percent, hence the five-month low. December 2009 figure meanwhile stood at 4.4 percent.

“This was primarily due to the deceleration in the annual inflation rate in the heavily weighted food, beverages and tobacco (FBT) index. Slower annual price increments in the indices of housing and repairs and miscellaneous items also contributed to the downtrend,” the NSO said in a statement

Prices for food, beverages, and tobacco increased at a slower rate of 4.3 percent from 5.2 percent while annual inflation rates of other commodity groups did not move significantly.

While inflation for clothing was steady at 2 percent, those of housing and repairs and miscellaneous items accelerated at slightly slower rates of 2 percent and 1.7 percent against a month ago’s 2.1 percent and 1.8 percent, respectively.

Higher price increments were noted in fuel, light and water and services at 9.2 percent and 5.1 percent against last month’s 7.7 percent and 3.5 percent, respectively.

Excluding selected food and energy items, core inflation slowed to 3 percent in January from 3.2 percent in December.

Gross reserves hit US$45 billion

In a related development, the country’s gross international reserves (GIR) in January rose to US$45.4 billion supported by proceeds from the government's recent bond sale, the Bangko Sentral ng Pilipinas said in a statement.

The end-January GIR level is US$1.2 billion U.S. dollars higher than December's level. With this, the net international reserve (NIR) is now US$45.4 billion.

The NIR refers to the difference between the central bank's GIR and total short-term liabilities.

The BSP added that apart from the bond sale, the inflows from the central bank's net foreign exchange operations and income from investments abroad also helped raised the country's GIR.

This month’s GIR level could cover 9.2 months of imports of goods and payments of services and income; and is also equivalent to 10.1 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity. (Virgil Lopez/Sunnex)