Inflation rate in December likely rose from 1.1 percent recorded in November, on higher food prices and weaker peso, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said Monday.
“The BSP forecast suggests that December inflation could settle within the 1.1 to 1.9-percent range. The increase in LPG prices, upward electricity rate adjustment, transitory increases in food prices due to typhoon Nona and the weaker peso could provide upward inflation pressures,” Tetangco said in a text message.
“Meanwhile, lower domestic rice and petroleum prices could keep inflation subdued for the month,” he said.
The peso depreciated by 5.6 percent against the US dollar this year, making several import items more expensive.
Tetangco said despite the expected higher prices in December, the full-year inflation in 2015 would remain below the target range of 2 percent to 4 percent. The government is set to release the December inflation data after the New Year.
“Moving forward, the BSP will remain watchful of economic and financial developments to ensure sustained price and financial stability,” Tetangco said.
Inflation rose to 1.1 percent in November from 0.4 percent in October. The November inflation was also slower than the 3.7 percent a year ago.
This brought inflation in the first 11 months to 1.4 percent, lower than Bangko Sentral’s target range.
Tetangco said earlier that with credit and domestic liquidity growth rates also stabilizing, “these signal that our stance of policy right now is appropriate.”
The Monetary Board, the policy-making body of Bangko Sentral ng Pilipinas, on Dec. 17 kept the benchmark interest rates steady for the tenth consecutive time since October last year as inflation rate was expected to settle below the target range.
Key policy rates were retained at 4 percent for overnight borrowing and 6 percent for overnight lending.
The Monetary Board’s decision was based on its assessment of inflation dynamics and the risks to the inflation outlook over the policy horizon.
Latest baseline forecasts indicated that average inflation would likely settle below the target range.
“However, inflation is seen to return gradually to a path consistent with the inflation target for 2016-2017, as the effects of recent weather disturbances continue to be felt. Meanwhile, inflation expectations remain firmly anchored within the inflation target band for 2016 and 2017,” the board said.
The board also kept the inflation average forecast for 2015 at 1.4 percent. However, the forecast for 2016 was increased to 2.4 percent from the previous estimate of 2.3 percent.