Bangko Sentral ng Pilipinas on Friday said inflation in December likely rose to within the 1.8-percent-to-2.6-percent range from 1.3 percent in November, driven mainly by higher power rates and oil prices.
The BSP’s Department of Economic Research said in a statement Friday higher electricity rates and oil prices along with the impact of weather-related disturbances on selected food items were the primary sources of upward price pressures for the month.
“Meanwhile, inflation could be tempered by the continued easing of domestic rice prices,” it said.
“Looking ahead, the BSP will remain watchful of evolving price trends and ensure that the monetary policy stance remains appropriate to maintain price stability that is conducive to a balanced and sustainable economic growth,” it said.
Inflation in November rose to 1.3 percent from 0.8 percent a month ago. The figure was still significantly slower compared with 6 percent a year ago, bringing the average in the first 11 months to 2.5 percent, well below the midpoint of the target range of 2 to 4 percent.
On Dec. 12, the Monetary Board, the policy-making body of Bangko Sentral ng
Pilipinas, kept the benchmark interest rate at 4 percent, taking into account the continuing benign inflation environment.
The interest rates on the overnight deposit and lending facilities were also kept unchanged at 3.5 percent and 4.5 percent, respectively.
Earlier, ING Bank Manila said inflation in 2020 would continue to remain benign as the Rice Tariffication Law became instrumental in tempering the price of the staple in 2019.
ING Bank Manila senior economist Nicholas Mapa considered Republic Act 11203 as “possibly the single most effective inflation-fighting development in 2019 and will likely help keep inflation in-check going into 2020.”
“Thus, with the ability to import rice on demand and better weather ahead (no El Niño forecast in 2020), we can expect inflation to bounce and settle in 2020, gradually rising towards Bangko Sentral ng Pilipinas’ 3 percent inflation target and average 3.2 percent in 2020,” Mapa said.