Filipino consumers will experience more stable prices of goods and services this year, after a significant portion of their buying power was eroded by high inflation last year, the Bangko Sentral ng Pilipinas said in a letter to President Duterte last week.
The open letter to the Chief Executive—required by law whenever the central bank fails to keep the consumer price index within its annual target range—said that optimism over the 2019 outlook for prices was also boosted by the government’s decision to liberalize the importation of rice.
“Inflation readings as of late have been encouraging,” BSP Deputy Governor Chuchi Fonacier said in the letter. “Both headline and core inflation have begun to decline in the last quarter of 2018.”
These are indications that demand pressures have not built up significantly and that the supply-driven inflation process experienced in 2018 was not to be persistent, she said, noting that headline inflation rate for December 2018 at 5.13 percent was lower than the 6.03 percent in November, 6.68 percent in October, and 6.7 percent in September.
“Looking ahead, we are optimistic that inflation will continue to ease in the coming months,” she said.
Explaining last year’s sharp inflation uptick, the central bank said it was driven mainly by so-called supply side factors like petroleum and food prices that were initially beyond the scope of monetary policy tools to control.