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MANILA — In December, inflation decreased for the third consecutive month, despite the typical increase in demand during the holiday season.
This was attributed to slower rises in utility expenses and the prices of certain essential food items.
Inflation—as measured by the Consumer Price Index (CPI)— eased to 3.9 percent year-on-year in the final month of 2023, from 4.1 percent in November, the Philippine Statistics Authority (PSA) reported Friday.
The latest reading fell within the Bangko Sentral ng Pilipinas’ (BSP) forecast range for last month of 3.6 percent to 4.4 percent. It was also the slowest print since February 2022.
With that, the monthly price growth is now back to the government’s 2 to 4 percent target range.
But for the entire 2023, inflation averaged 6 percent, higher than the 5.8 percent recorded in 2022. It also marked the second straight year of above-target inflation.
Data showed food inflation at the national level eased to 5.5 percent in December, from 5.8 percent in the previous month.
Core inflation, which strips out volatile food and energy prices, was at 4.4 percent in December versus 4.7 percent in the previous month.
Economists in a Reuters poll had forecast annual inflation of 4 percent in December, within the central bank’s 3.6 to 4.4 percent projection for the month.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said the December inflation print was consistent with its projections that inflation would likely moderate in the near term due to easing supply-side price pressures and negative base effects.
“Nonetheless, the balance of risks to the inflation outlook continues to lean significantly toward the upside,” it said.
Key upside risks are associated with potential pressures from higher transport charges, increased electricity rates, higher oil prices, and higher food prices due to strong El Niño conditions, the BSP said.
Meanwhile, the impact of a relatively weak global recovery as well as government measures to mitigate the effects of El Niño could reduce the central forecast, it added.
“Looking ahead, the Monetary Board deems it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident,” according to the central bank.
“The BSP will continue to monitor inflation expectations and second-round effects and take appropriate action as needed to bring inflation back to the target, in keeping with the BSP’s price stability mandate.” with a report from Reuters
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