January inflation likely settled within BSP target

MANILA, Philippines — Headline inflation may have settled within the 2.5 to 3.3 percent range in January, possibly breaching the three percent level amid higher prices of gas and food items, according to the Bangko Sentral ng Pilipinas. 

The BSP’s month-ahead forecast shows that inflation may either pick up or go below the four-month high of 2.9 percent in December and 2.8 percent in January 2024.

 January would mark the third straight month that inflation settled within the BSP’s two to four percent target. The Philippine Statistics Authority will report the inflation data on Feb. 5. 

“Upward price pressures in January stem from the rise in petroleum prices, increased prices of major food items owing to the lingering effects of recent weather disturbances, as well as the annual adjustments in water rates and sin taxes,” the BSP said. 

However, lower prices of rice and electricity rates are expected to mitigate the upward price pressures last month.  

“Going forward, the Monetary Board will continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment,” the central bank said. 

BSP Governor Eli Remolona Jr. earlier said that despite the series of rate cuts that it delivered last year, monetary policy remains in restrictive territory, leaving room for further easing this 2025. 

The Monetary Board slashed policy rates by 25 basis points during its policy meeting last December, bringing the key rate down to 5.75 percent. The central bank has delivered a total of 75 bps rate cuts since August 2024.

Prior to the rate cuts, the BSP maintained its policy rate for six consecutive meetings since November 2023. From May 2022 to October 2023, the central bank had aggressively raised rates by a total

of 450 basis points to rein in inflation. 

The Monetary Board decided to adjust the frequency of its policy meetings to six per year, starting in 2025, from seven meetings per year previously. 

“This change to bimonthly intervals will enable more in-depth analysis of data updates and provide the BSP with greater scope for consultations with sector experts on its forecast assumptions,” it earlier said. 

 The BSP will have its first policy review this year on Feb. 13.