MANILA – The Bangko Sentral ng Pilipinas (BSP) forecasts January 2020 inflation rate to go up to as high as 3.3 percent, with the lower end of the projection at 2.5 percent, due to upticks in the prices of the liquified petroleum gas (LPG) and selected food items.
The lower end of the forecast range is the same level as the December 2019 print.
In a statement Friday, the central bank said the increase of excise tax rates of tobacco products starting this month also adds to the inflationary pressures in the first month this year.
These factors are, however, seen to be countered by lower power rates in areas serviced by the Manila Electric Company (Meralco) and the series of cuts on fuel prices.
“Moving forward, the BSP will continue to monitor evolving price trends to ensure that the monetary policy stance remains consistent with the mandate of maintaining price stability conducive to economic growth,” it added.
Rate of price increases has been posting upticks since slowing to 0.8 percent in October 2019.
This deceleration is a turn-around from the elevated levels in 2018, which saw its peak at 6.7 percent in September and October due to supply-side factors, particularly the jump in rice prices because of supply issues.
Monetary officials expect domestic inflation rate to continue to normalize in the coming months and to average this and next year at around 2.9 percent, within the government’s 2-4 percent target band. BSP Governor Benjamin Diokno on Thursday said they will assess their inflation forecasts, among others, when the policy-making Monetary Board (MB) meets for their rate-setting meet on February 6, to ensure that monetary policy stance remains appropriate. (PNA)