BSP sees 2.5%-3.3% inflation in January

Published February 1, 2020, 12:00 AM

by manilabulletin_admin


The Bangko Sentral ng Pilipinas (BSP) said the inflation rate for the month of January could be as high as 3.3 percent or stay at 2.5 percent which was December’s results.

BSP’s Dennis D. Lapid, the head of the Department of Economic Research expects inflation will gradually increase in the first quarter as base effects diminishes.

“(The DER) projects January 2020 inflation to settle within the 2.5–3.3 percent range. Higher prices of LPG and selected food items as well as adjustments in the excise taxes on tobacco products are the primary sources of upward price pressures for the month,” the BSP said Friday.

But, it added that “inflation could be tempered by the lower electricity rates in Meralco serviced-areas and rollbacks in fuel prices during the month.”

On Thursday, BSP Governor Benjamin E. Diokno said their initial assessment on Taal Volcano eruption and its impact on inflation is that it will be minimal and temporary.

Diokno said they expect a “slight uptick” in commodity prices in the first three months of the year as a result of the Taal calamity, but that “the impact is likely temporary and will dissipate as the situation stabilizes.” The affected commodities are coffee, cacao, pineapple, assorted fruits and vegetables, rice, coconut and fish.

The BSP’s Monetary Board will have its first monetary policy meeting next week, February 6. The central bank has a 2020 and 2021 average inflation forecast of 2.9 percent.

Private sector economists surveyed by the BSP also forecast 2.9 percent for this year but they have a higher 2021 estimate of 3.1 percent.

The survey, which included 26 economists working in banks or financial institutions, showed that 21 of those surveyed think there is an 88.5 percent probability that the average inflation for 2020 will settle between the government’s two-four percent target range. For 2021, a within-target average inflation is probable with an 87 percent chance.