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Inflation slows down to 2.

6% in February 2020

(3rd UPDATE) Transport and utility costs in the Philippines go down, as the novel coronavirus places
downward pressure on global crude oil prices

February's inflation remained within the 2% to 4% range and was lower than the 2.9% recorded in
January, as global demand for oil slowed down amid the novel coronavirus outbreak that started in
China. (READ: Coronavirus compounds Gulf economic woes as oil prices slump)

Economists previously noted that Filipinos got wary about the global health emergency and avoided
malls, which led to lower consumption and businesses reducing prices.

The downward trend in February was attributed to the slower annual increase in transportation costs.

"Price pressures abated in February as global crude oil prices plunged, dragging on transport costs and
utilities. Global crude oil prices tanked to as low as $44 per barrel in late February as the [coronavirus]
shut down China, prompting a possible production cut from OPEC (Organization of the Petroleum
Exporting Countries) members," said ING Bank Manila senior economist Nicholas Mapa

Economists also said that the downgrade in Taal Volcano's alert level effectively dissipated the upward
pressure on food prices.

The year-to-date inflation now stands at 2.8%.

Food and non-alcoholic beverages slowed down to 2.1% last month. In addition, annual increments
decelerated in the indices of alcoholic beverages and tobacco at 18.2%; and housing, water, electricity,
gas, and other fuels, 1.7%.

Inflation for the country's food index remained at 2.1% in February, slower than the 4.2% in the same
month last year.

Inflation in the National Capital Region and areas outside the capital decelerated further to 2% and 2.8%,
respectively.
The central bank is widely expected to again cut interest rates to shield the economy from the global
economic slowdown. In general, cutting interest rates encourages people to spend more and boost the
economy.However, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno earlier said in the
Manila Times business forum on Tuesday, March 3, that easing monetary policy may not do the trick,
since the fear of going out in public outweighs the incentives that lower interest rates offer.

"Government spending will boost the economy," Diokno had said.

He also said on Wednesday, March 4, that the BSP Monetary Board sees no need to hold an emergency
meeting to tweak interest rates, after a surprise rate cut by the United States federal reserve.

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