The Philippines likely welcomed the New Year with a lower inflation rate, as consumer prices may have stabilized in January, according to the projection made by the Bangko Sentral ng Pilipinas.
In its monthly statement on inflation outlook, the BSP’s Department of Economic Research said the January inflation rate may have settled within the 4.3 percent to 5.1 percent range.
The government will release official data on inflation and the consumer price index next week. If the rate falls within the BSP’s projection, it would be the third consecutive month that inflation decelerated after accelerating for 10 months in 2018.
In December, inflation slowed to 5.1 percent after November’s 6 percent and the peak of 6.7 percent seen in October and September last year.
The BSP said domestic oil-price hikes due to higher global petroleum prices, as well as the second tranche of the excise tax adjustment from the tax-reform law were the likely primary drivers of inflation for the month.
Also, higher fish and vegetable prices due to colder weather conditions and the annual adjustments in the excise taxes of alcoholic beverages under the “sin” tax law could result in additional upward pressures, it added.
However, the BSP noted that the upward pressures of these factors are likely to be partially offset by lower rice prices, downward adjustment in electricity rates and the slight appreciation of the peso.
“Looking ahead, the BSP will remain watchful of evolving inflationary conditions to ensure that the monetary-policy stance remains consistent with the BSP’s price stability mandate,” it said.
In its December monetary-policy meeting, the BSP Monetary Board decided to lower its inflation forecast to 3.18 percent for 2019 and 3.04 percent in 2020. The BSP also said it expects inflation to fall below 4 percent “around the end of the first quarter of 2019.”
The lower inflation path was the basis of Monetary Board officials to leave key policy rates unchanged during their December meeting.
The BSP’s target range for this year’s inflation is at 2 percent to 4 percent.