BSP sees uptick in Dec inflation

Prices likely rose further in December as a result of higher electricity rates and petroleum prices, which tend to push the cost of other goods and services up, according to the economists of the Bangko Sentral ng Pilipinas (BSP).

In a statement, the BSP’s Department of Economic Research projected inflation in the final month of 2019 to rise to between 1.8 to 2.6 percent.

In addition to these primary sources of upward price pressures for the month, according to the BSP, consumer prices would also be pressured upward by the impact of “weather-related disturbances on selected food items.”

The central bank’s inflation forecast for December was higher than the 0.9 to 1.7-percent inflation projection for November, which saw a 42-month low inflation of just 0.8 percent.

The actual inflation rate for November stood at 1.3 percent. The Philippine Statistics Authority is scheduled to announce the consumer price index for December in early January 2020.

“Meanwhile, inflation could be tempered by the continued easing of domestic rice prices,” the central bank said.

The BSP earlier said it was expecting the October inflation rate to be the lowest for this year and that prices of basic goods and services would start creeping up to more normal levels toward the holiday season.Earlier this month, the central bank declared victory in its war against inflation—which it had been waging for two years now—saying prices of consumer goods and services for next year and beyond would likely be “benign.”

This developed as BSP Governor Benjamin Diokno announced that the Monetary Board had decided to maintain the interest rate on the BSP’s overnight reverse repurchase facility at 4 percent during final meeting of the year.

“The Monetary Board’s decision is based on its assessment of a benign inflation environment,” the country’s chief inflation buster said in a press briefing. “Latest baseline forecasts indicate that the future inflation path remains within the target range of 3 percent, plus or minus 1 percentage point in 2020-2021, with well-anchored inflation expectations.”

At the same time, Diokno sought to manage the market’s expectations, saying that the balance of risks to the inflation outlook continue to lean slightly toward the upside in 2020, but toward the downside in 2021.

“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,” the BSP’s economists said in their statement.