Now that the inflation figures have come in, the government is now more confident that the rate of rise in the prices of goods and services will remain stable over the long term.
The National Economic and Development Authority (Neda) described how core inflation slowed down to 3.4 percent in December 2011 from 3.7 percent the previous month.
Also, core inflation for 2011 averaged 3.6 percent, slightly lower than the 3.7 percent reported in 2010, the Neda yesterday said.
According to agency officials, core inflation excludes certain items from the basket of goods and services that are considered volatile. It enables authorities to determine inflation trends over a longer period of time.
“This expected lower inflation may provide the Monetary Board room to adjust its policy stance in the first quarter of 2012,” said Neda Director General and Socioeconomic Planning Secretary Cayetano W. Paderanga Jr.
Last December 1, the Monetary Board maintained the borrowing and lending rates at 4.5 percent and 6.5 percent, respectively, due to the benign inflation environment and weak economic growth.
Also, an abundant supply of fruits, vegetables, and fish, coupled with a series of price rollbacks covering petroleum products, pulled down the rate of rise in consumer prices last December. As a result, inflation stayed well within the government’s 3-5 percent target range, coming in at 4.8 percent.
Price increases of major commodity groups, such as food and non-alcoholic beverages, as well as housing, water, gas, electricity and other fuels, were much slower in December compared to that of the previous month.
“Also, most major oil companies slashed the prices of kerosene and diesel in December,” the Cabinet official said.