As inflation soars 4.2%, BSP to consider price developments in its Monetary Board meeting next week
Inflation soars to 4.2 percent in January
MANILA – The year-on-year inflation rose to 4.2 percent in January, much higher than the 3.5 percent in December and above the Bangko Sentral ng Pilipinas’ forecast of 3.3-4.1 percent for the month.
Core inflation, according to the BSP statement, excludes selected volatile food supply and energy items to depict underlying demand-side price pressures, edged higher to 3.4 percent in January from 3.3 percent in December. On a month-on-month seasonally-adjusted basis, inflation increased slightly to 0.9 percent in January from 0.8 percent in December.
The higher inflation was due to faster price increases in selected key food items. The BSP said inflation for meat remained high due to the impact of the African Swine Fever on domestic supply. They also noticed year-on-year inflation for fruits and vegetables increased which also contributed to the rise in overall food inflation.
Fish inflation likewise increased due to reduced supply at the close of the fishing season. The year-on-year non-food inflation held steady in January compared with December 2020.
The BSP said the elevated inflation figure in January is in accordance with the BSP’s prevailing assessment of a “transitory uptick” in inflation for the first half of 2021 due to the ongoing supply-side pressures and positive base effects.
Average inflation is expected to settle within the 2.0 – 4.0 percent target range over the policy horizon with direct measures pursued by the National Government to address the availability of affected commodities.
The Monetary Board will consider the recent price developments, specifically in global commodity markets, together with the Q4 2020 GDP outturn in its assessment of the monetary policy stance in his meeting later next week. (Melo M. Acuña)