Inflation rate eased to a 10-month low of 4.4 percent in January from 5.1 percent in December, on slower increases in the prices of non-alcoholic beverages and food products, the Philippine Statistics Authority said Tuesday.
“This gives us an auspicious start in our efforts this year to keep inflation manageable and bring it back to the government’s target range of 2 to 4 percent for 2019,” the government’s economic team said in a statement Tuesday.
The January inflation was the slowest since it settled at 4.3 percent in March 2018, but was still faster than 3.4 percent registered in January 2018. Inflation peaked at a nine-year high of 6.7 percent in October 2018, before easing to 6 percent in November and 5.1 percent in December as the immediate measures implemented by the government took effect.
“The Philippine’s annual headline inflation at the beginning of 2019 continued to move at a slower pace of 4.4 percent...This was primarily due to the slowdown in the annual increment of the index for the heavily weighted food and non-alcoholic beverages at 5.6 percent, from 6.7 percent in December 2018,” the PSA said.
The Bangko Sentral ng Pilipinas said the latest inflation outturn was in line with the target and was expected to decelerate further in 2019 to 2020.
“Domestic supply-side pressures are seen to further ease, while the impact of BSP monetary policy adjustments in 2018 is expected to continue to work their way through the economy. Meanwhile, volatility in the global oil market will likely continue to influence the outlook for inflation,” the BSP said in a statement.
“Against this backdrop, the BSP continues to keep a close watch over price developments in the country and shall consider all relevant information at its next monetary policy meeting on Feb. 7, 2019 to ensure that the monetary policy stance remains consistent with the BSP’s primary mandate of price stability,” it said.
The economic team said they expected inflation to further ease in the near term and settle at 3.2 percent and 3.0 percent in 2019 and 2020, respectively, as seen by the Bangko Sentral ng Pilipinas.
“With the expected enactment into law of the Rice Tariffication bill soon, the government is preparing for a quick and smooth transition to the new import tariff regime, along with the operationalization of the National Single Window to facilitate seamless trade transactions,” they said.
The PSA said contributing to the downtrend of the headline inflation were the lower annual increases in the indices of alcoholic beverages and tobacco, at 16.1 percent; clothing and footwear, 2.5 percent; housing, water, electricity, gas, and other fuels, 4 percent; health, 4.3 percent; and transport, 2.5 percent.
Meanwhile, the annual inflation rate for furnishing, household equipment and routine maintenance of the house index went up to 3.9 percent. The rest of the commodity groups retained their previous month’s annual rates.
Excluding selected food and energy items, core inflation eased to 4.4 percent in January 2019 from 4.7 percent in December.
Data showed that in the National Capital Region, year-on-year inflation slowed down to 4.6 percent in January 2019 from 4.8 percent in December 2018 and 4.7 percent in January 2018.
Following the same trend as the national level and the National Capital Region, annual inflation in areas outside NCR slid to 4.4 percent in January 2019 from 5.3 percent in December 2018.
The January inflation fell within the 4.3 to 5.1 percent forecast range by the Bangko Sentral.
Inflation settled at 5.2 percent in 2018, faster than 2.9 percent in 2017 and above the target range of 2 percent to 4 percent for the year.
The policy-making Monetary Board of the Bangko Sentral on Dec. 13 decided to keep the benchmark interest rates steady in the belief that inflation would continue to be on a downtrend.
The BSP raised a total of 175 basis points in policy rate since May 2018 in a bid to curb the rising inflation.