December inflation rises to 1.5%

MANILA, Philippines – Inflation kicked up to a seven month high of 1.5 percent in December from 1.1 percent in November amid the continued increase in food prices, the Philippine Statistics Authority (PSA) reported yesterday.

The consumer price index last month was the highest level since May last year when inflation averaged 1.6 percent. Inflation bottomed out at 0.4 percent in September and October.

Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the 2015 inflation stood at an average rate of 1.4 percent from 4.1 percent in 2014, below the central bank target of two percent to four percent.

“As we expected, this is below the government’s target for 2015. But our forecasts for 2016-17 show an inflation path consistent with the government target of two to four percent,” Tetangco said.

According to the PSA, price increases in cigarettes and alcoholic beverages were noted in many regions, while higher charges in electricity rates and upward adjustments in air and ship fares were also observed in many regions.

The higher prices were tempered by the price decreases in rice, corn, fruits, vegetables, calamansi and ginger and the series of price rollbacks in gasoline, diesel and kerosene in December.

Data showed the annual inflation in food index alone advanced by 1.8 percent in December from 1.7 percent in November.

Tetangco said upside risks include uneven global growth prospects and the harsher El Niño while declining oil prices lead the list of downside risks.

“Future decisions of the BSP to adjust the policy rate will remain data dependent taking into account the confluence of demand and supply factors that it considers in forecasting inflation,” he said.

The BSP has kept interest rates unchanged for 10 straight policy-setting meetings since October 2014. The overnight lending rate is currently pegged at four percent, while the overnight borrowing rate is at six percent after the rates were raised by 50 basis points in 2014. –Lawrence Agcaoili (The Philippine Star) with Ted Torres