The Bangko Sentral ng Pilipinas (BSP) said on Friday the country’s headline inflation likely rose to 3.7 percent this month on higher prices of fuel, meat and sin products, and on increased power rates.
In a statement, BSP Governor Benjamin Diokno said January’s point inflation estimate was within the 3.3- to 4.1-percent forecast range of the central bank.
The outlook was faster than the 3.5-percent consumer price growth in December 2020 and the 2.9 percent a year earlier.
The Philippine Statistics Authority (PSA) will release official January inflation data on February 5.
“Higher prices of fuel and meat, as well as increased Meralco (Manila Electric Co.) power rates and excise taxes on alcoholic beverages and tobacco, contributed to upward price pressures during the month,” Diokno said.
Local oil companies hiked fuel prices three times this month. Price increases for gasoline, diesel and kerosene ranged from 45 centavos to P1, 35 centavos to P1.05, and 25 centavos to 95 centavos per liter, respectively.
Meralco also raised its per kilowatt-hour (kWh) rate for households consuming 200 kWh monthly by P0.2744 this month.
Meanwhile, the government slapped higher tax rates on alcoholic drinks and tobacco items this month, which is mandated under Republic Acts 11346 and 11467.
These upside risks, Diokno said, “could be partly offset by stable rice prices [and] lower prices of selected fish and vegetables, as well as the continued appreciation of the peso.”
Latest PSA data showed that rice prices declined in the first week of January, with the average retail price of regular milled rice plunging to P33.33 a kilogram from P33.38 a kilogram a week earlier.
The local currency currently trades within the P48:$1 level, sustaining the trend since the end of 2020, when it closed at a four-year high of P48.02 against the US dollar.
Earlier in its 2020 Fourth Quarter Inflation Report, the central bank said the results of its poll of private-sector economists showed that the mean inflation forecast for 2021 picked up to 2.9 percent from 2.8 percent.
The outlook was faster than the 2.6-percent average in 2020, but slower than the 3.2-percent forecast of the BSP and falls within the government’s 2.0- to 4.0-percent target.
“Analysts expect inflation to remain benign in the near term, with risks to the inflation outlook tilted to the upside as the economy gradually reopens,” the Bangko Sentral said.
Upside risks to inflation that it identified include food-supply disruptions due to recent typhoons and the likely occurrence of weather disturbances in the near term amid La Niña; the rebound in oil prices on the possible recovery in demand; higher consumer spending during the holiday season; and the impact of the central bank’s monetary policy actions.
Meanwhile, downside risks are seen from muted domestic demand, as consumer confidence remains weak, and low purchasing power amid high unemployment rate; a strong peso against the US dollar; and soft global crude oil prices.
Source: ManilaTimes
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