BSP sees lower inflation in December

MANILA, Philippines — Inflation might have slowed down for another month in December on the back of tumbling oil and rice prices, lower transport cost and a tad stronger currency, the Bangko Sentral ng Pilipinas said Friday.

In a statement, the BSP’s Department of Economic Research said inflation likely settled within 5.2-6 percent range in December.

If the low-end of the BSP’s forecast range is realized, it would fall below the 6 percent print chalked up in November, which saw inflation ease for the first time in 2018 to post the slowest rate in four months.

“The sustained slowdown of inflation during the month is seen to be driven mainly by the continued decline in petroleum and rice prices, the rollback in minimum jeepney fare and the slight appreciation of the peso,” the central bank said.

“However, these factors could be offset in part by higher electricity rates in Meralco-serviced areas,” it added, referring to the largest power distributor in the country.

After delivering back-to-back hikes since May, the BSP kept its key rate unchanged at its last rate-setting meeting for 2018, citing “receding price pressures.”

In the first 11 months, rising prices averaged 5.2 percent, still above the BSP’s 2-4 percent annual inflation target range set until 2020.

At its December meeting, the BSP also cut its inflation forecasts, with soaring prices now seen averaging 5.2 percent this year from 5.3 percent, 3.18 percent in 2019 from 3.5 percent, and 3.04 percent in 2020 from 3.3 percent.

Monetary authorities likewise expect monthly inflation to return to within the government’s target band "by around the end of the first quarter of 2019," against their previous projection that inflation will stay above-target in the first half of next year.

“Moving forward, the BSP will continue to closely monitor evolving price trends and domestic demand condition to help ensure that the inflation target is achieved,” the central bank said.

The government will release the official December inflation figure on January 4. — Ian Nicolas Cigaral