Inflation could have slowed for a third straight month in January despite fresh excise tax hikes, the Bangko Sentral ng Pilipinas (BSP) indicated on Thursday as it issued a 4.3-5.1 percent forecast for the month.
Consecutive monthly increases since the start of 2018 led to consumer price growth hitting a nine-year high of 6.7 percent in September and October, well over the BSP’s 2.0-4.0 percent target.
The pace only began moderating in November (6.0 percent) and December (5.1 percent — the upper end of the BSP’s January forecast), which capped full-year inflation at 5.2 percent.
“Domestic oil price hikes, due to higher international crude oil prices and the second tranche of the excise tax adjustment from the Train law, is seen to be the primary driver of inflation for the month,” the BSP said.
Official January data is scheduled to be released on Tuesday, February 5, by the Philippine Statistics Authority.
Oil firms increased pump prices four times this month as a second round of excise tax hikes took effect.
“In addition, higher fish and vegetable prices due to colder weather conditions and the annual adjustments in the excise taxes of alcoholic beverages from the Sin Tax law could result in additional upward price pressures,” the Bangko Sentral added.
Alcohol excise tax rates also increased by 4 percent this year as prescribed by Bureau of Internal Revenue Revenue Regulation 17-2012.
“These may be partly offset by lower rice prices, downward adjustment in electricity rates, and the slight appreciation of the peso,” the central bank said.
“Looking ahead, the BSP will remain watchful of evolving inflationary conditions to ensure that the monetary policy stance remains consistent with the BSP’s price stability mandate.”
Rising inflation prompted the BSP’s policymaking Monetary Board to raise key interest rates five consecutive times beginning May last year.
Monetary authorities expect consumer price growth to return to the 2.0-4.0 percent target range this year and analysts have said that policy rates could be kept unchanged for the time being, even possibly for the rest of the year.