Inflation most likely stayed at 1.1 percent this month or picked up to as high as 1.9 percent, the Bangko Sentral ng Pilipinas (BSP) said on Monday, with the higher cost of power, food and cooking gas, as well as a weak peso, offsetting lower fuel and rice prices.
“The BSP forecast suggests that December inflation could settle within the 1.1 percent to
1.9 percent range,” central bank Governor Amando Tetangco Jr. said in a text message to reporters.
Inflation accelerated to 1.1 percent in November, its biggest rise in five months. Data for December is scheduled to be released by the Philippine Statistics Authority on January 5.
Tetangco said the increase in liquefied petroleum gas (LPG) prices, an electricity rate adjustment, a transitory increase in food prices due to Typhoon Nona and the weaker peso could provide upward inflation pressures.
Earlier this month, oil companies such as Petron Corp. and Eastern Petroleum Corp. increased prices of LPG by P2.80 per kilogram and P1.57 per liter, respectively.
Manila Electric Co., for its part, implemented a P0.055 per kilowatt-hour (kWh) hike in its power rates this month. The hike is equivalent to an additional P11 for a typical household consuming 200 kWh.
Meanwhile, the Department of Agriculture reported that Typhoon Nona, which battered the country in the third week of December, caused an estimated P338.9 million in agriculture damage, mostly to rice and high-value crops.
The peso, lastly, weakened to a new six-year low on December 14 after it closed P47.34 against the US dollar on Fed interest rates hike expectations.
Providing downward pressure for headline inflation are lower domestic rice and petroleum prices, Tetangco noted.
This month, oil companies reduced pump prices for three consecutive weeks. They rolled back prices of diesel by a total of P3.70 per liter, P3.35/liter for kerosene and 50 centavos per liter for gasoline.
The central bank’s December forecast is well below the 2 percent to 4 percent target for the year. With this, Tetangco reiterated that average inflation for 2015 would not hit the programmed range.
As of November, year-to-date inflation remained below target at 1.4 percent.
The central bank has said that headline inflation could average 1.4 percent this year before inching up to 2.4 percent in 2016 and 3.2 percent in 2017.
“Moving forward, the BSP will remain watchful of economic and financial developments to ensure sustained price and financial stability,” Tetangco said.