HIGH food prices pushed inflation to 7.3 percent in February from 7.1 percent in January and 5.4 percent the year before, the National Statistics Office reported yesterday.

But core inflation, which excludes selected food and energy items, slowed to 6.4 percent last month from 6.9 percent in January, the government agency said.

It made the announcement even as the central bank cut its benchmark interest rates to the lowest in at least 16 years to shield the economy from the deepening global recession.

The cut brought the Bank?s overnight borrowing rate to 4.75 percent and its overnight lending rate to 6.75 percent, Governor Amando Tetangco Jr. said.

The decision was predicted by one of the 12 economists surveyed by Bloomberg News. The rest expected a half-point reduction.

The lower-than-expected interest rate cuts recognized the upside risks to inflation, Deputy Governor Diwa Guinigundo said, adding they were adequate because the earlier cuts had already ensured ample liquidity in the financial system.

?The Monetary Board believes that the global financial strains are likely to persist and pose risks to economic activity,? Tetangco said in a statement.

?An accommodative monetary policy stance is expected to help ensure greater availability of credit and reinforce market confidence.?

Yesterday?s cuts brought the total reduction in the central bank?s interest rates to 1.25-percentage points since mid-December.

Economic Planning Secretary Ralph Recto said government planners had approved an inflation forecast of 3.0 percent to 5.0 percent this year, which are lower than the 6.0 percent to 8.0 percent assumed earlier.

?While the data on year-to-date inflation of 7.1 percent was significantly higher than the new forecast range, inflation for the year is seen to fall within the range as it could decelerate in the latter part of the year partly due to base effects,? Recto said.

Economist Bernardo Villegas of the University of Asia and the Pacific said inflation would fall to 4.9 percent this year from 9.7 percent last year.

Inflation in the emerging markets including the Philippines would average 7.1 percent this year against 1.4 percent for the advanced economies, said Ramon Quesada, a professor at the same school.

Lower inflation would help the Philippine economy grow by 3.8 percent in 2009 despite the threat of global economic recession, he said.

The NSO said inflation picked up in February as a result of increases in the prices of rice, meat, corn and eggs.

?Moreover, higher prices of liquefied petroleum gas in many regions including Metro Manila, and increased prices of charcoal in some regions were also observed during the month,? the agency said. Roderick T. dela Cruz and Eileen A. Mencias with Bloomberg