March 5, 2020 / 1:41 AM / a month ago

UPDATE 1-Philippines inflation slows for first time in 4 months in Feb

* Feb inflation slows to 2.6% vs 2.9% in Jan

* Slower inflation due to lower food, transport costs

* says no off-cycle policy rate cut

MANILA, March 5 (Reuters) - Philippine annual inflation slowed for the first time in four months in February as the costs of food, transport and utilities eased, the statistics agency said on Thursday.

Consumer prices rose to 2.6% in February from a year earlier after a 2.9% rise in the previous month. Analysts in a Reuters poll had expected a 3.0% rise.

Core inflation, which strips out volatile food and fuel items, eased to 3.2% in February from 3.3% in January.

A decline in prices would allow the central bank, if needed, to cut interest rates beyond what Governor Benjamin Diokno had committed, to protect the Philippine economy from the fallout from the coronavirus outbreak.

While Diokno remained committed to cutting interest rates by another 25 basis points this year after the quarter-point cut in February, he has said that he will consider more cuts in rates and banks’ required reserves if conditions called for them.

Diokno said on Wednesday there will no off-cycle policy rate cut and that the Federal Reserve’s decision to cut rates, the impact of coronavirus, and the February inflation rate would all be tabled at the central bank’s March 19 policy meeting.

The central bank previously estimated the virus outbreak could shave up to 0.2 percentage points off first-quarter growth and 0.4 percentage points off second-quarter growth, but the forecasts were being reviewed.

Diokno said growth could be at 6.0% this year, below the government’s 6.5%-7.5% target for the year. (Reporting by Karen Lema and Neil Jerome Morales; editing by Uttaresh.V)

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