Philippines Inflation January 2019


Philippines: Inflation eases further in January

February 5, 2019

Consumer prices rose 0.2% over the prior month in January, contrasting the 0.6% decline logged in December. January’s uptick was driven by higher prices across a broad range of categories, with the strongest price gains posted in alcoholic beverages and tobacco; food; health; and furnishings and household equipment. Conversely, lower transport prices offset the print.

Inflation fell notably to 4.4% in January from 5.1% in December. Softer food and transport inflation were drivers of the deceleration. Nevertheless, inflation remained above the upper bound of the Central Bank’s target range for the 2018–2020 period, set at 3.0% plus or minus 1.0 percentage point. Annual average inflation meanwhile edged up to 5.3% in January from 5.2% in December.

With inflation on a clear downward trend towards the target range, the Central Bank should have more room to maneuver at its next monetary policy meeting on 7 February, which will likely see the Bank stand pat. Moreover, if inflation maintains a downward trajectory, it could arm the BSP with further reason to turn accommodative sooner than previously expected. However, in a speech in late January Bangko Sentral ng Pilipinas Governor Nestor Espenilla signaled the Bank will most likely take a cautious approach to any change in its stance and reaffirmed the BSP stands ready to hike if inflation were to jump again, commenting “Even as we continue to see abating pressures on prices, the BSP will remain vigilant and ready to employ monetary responses to keep prices stable and rein in inflation expectations”.

Philippines Inflation Forecast

FocusEconomics Consensus Forecast panelists expect inflation to average 4.0% in 2019, which is down 0.2 percentage points from last month’s projection. For 2020, panelists see inflation of 3.7%.


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Philippines Inflation Chart

Philippines Inflation January 2019

Note: Annual and monthly variation of consumer price index in %.
Source: Central Bank of the Philippines (BSP) and FocusEconomics calculations.

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