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By Darwin G. Amojelar, Reporter
CONSUMER prices last month rose at their weakest
pace in two and a half years, but this failed to prevent the average
inflation rate for 2006 from breaching the Bangko Sentral ng
Pilipinas’ (BSP) target.
The National Statistics Office (NSO) said on
Friday that the December inflation rate further dropped to 4.3
percent from November’s 4.7 percent owing to a slowdown in the
rise in prices of food, fuel and other utilities. The December
figure was within the BSP’s forecast of between 4.2 percent and
4.8 percent for the month.
Last month’s average price increase was the
slowest since March 2004, when the inflation rate stood at 4.2
percent.
In a statement, Socioeconomic Planning Secretary
Romulo Neri said the series of rollbacks in the prices of petroleum
products, which resulted in discounted jeepney fares in Metro Manila
pulled the services index down by 0.2 percent.
Prices of clothing, however, rose, while house
and repairs, services and miscellaneous items stabilized from the
previous month.
The slower increase in food prices can be traced
to lower inflation rates for corn, cereal preparations, dairy
products, eggs, fruits and vegetables.
Prices of rice and meat, however, had risen,
even as fish prices remained the same as a month ago.
“Supertyphoon Reming did not push up prices of
vegetables in the National Capital Region as the areas hit by the
typhoon are not major producers of vegetables. Thus, the sufficient
volume of deliveries of vegetables in the various wet markets in NCR
lowered its prices in the area,” the NSO said.
Despite the slowdown in consumer price
increases, the average for 2006 stood at 6.2 percent, much higher
than the BSP’s target of between 4 percent and 5 percent.
The BSP is one of a growing number of central
banks around the world that adopted an inflation-targeting framework
when deciding on their interest-rate policy. Under this framework, a
central bank sets an annual inflation target, which monetary
authorities are supposed to work toward when deciding on how to
fiddle with interest rates, which in the case of the Philippines are
the overnight borrowing and lending rates that the BSP meets on
every month.
The BSP is required to report to the public
whenever it fails to meet its target inflation rate.
For this year, the central bank retained a
4-percent to 5-percent inflation target. It, however, forecast
inflation to range between 4.3 percent and 4.8 percent.
“The lower rate for December bodes well within
target inflation rate for 2007, barring any adverse shocks. It also
affords the BSP greater latitude in the conduct of monetary
policy,” BSP Governor Amando M. Tetangco Jr. told reporters.
To date, the central bank has kept its overnight
borrowing and lending rates at four-year highs of 7.5 percent and
9.75 percent, respectively.
The BSP has kept its interest rates steady for
the past several months given upside risks to future inflation,
including higher domestic power costs and the potential upward
pressure on food prices posed by the mild El Nińo dry spell.
Other upward pressures on prices include
international crude oil prices, which remain vulnerable to
geopolitical disruptions, and the unabated inflows of dollars, which
has been spurring growth in domestic liquidity.
--With Maricel E. Burgonio
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