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Inflation Rate Continued to Be Moderate in December


“We are pleased to learn that inflation remained subdued in December 1999.  The inflation rate continued to be moderate at 4.3 percent in December 1999 notwithstanding the seasonally high demand experienced during the Christmas holidays.  Although higher than the previous month’s inflation rate of 3.9 percent, the December inflation rate was lower than the government’s revised inflation target of 6.0 percent during the month.  The December inflation rate brought down the 1999 average inflation rate to 6.6 percent, lower than both the 9.8 percent rate the previous year and the government’s inflation target of 7.0-8.0 percent for 1999.”

  “The moderate acceleration in the December inflation rate was on account partly of an increase in the average prices of food, beverages, and tobacco (FBT) to 0.6 percent from 0.1 percent in November.  Food inflation alone increased by 0.2 percent in December against the 0.1 percent decline in November due to higher inflation rates of rice and miscellaneous foods.  However, all other food items recorded lower prices in December compared to their previous month’s levels, except for dairy products, the prices of which remained unchanged.”

 “Among the non-food items, the inflation rates of clothing, services, and miscellaneous items rose in December compared to their previous month’s levels, while average prices of housing and repairs and fuel, light, and water, were steady.”    

 “The inflation rate in December was much lower than the BSP’s inflation objective, and hence, continues to provide the monetary authorities greater flexibility in monetary management.   However, the BSP will continue to exercise prudence in anticipation of inflationary pressures that may affect future price stability, bearing in mind that the impact of monetary policy on the inflation rate exhibits long and variable lags.”      

 “The monetary authorities view the current monetary policy stance as supportive of its inflation objective in the medium term and the maintenance of overall macroeconomic stability balanced by the desirability of helping sustain the recovery.  The BSP will nevertheless remain watchful of any development that may affect macro stability and respond as may be necessary.”  

 “We expect the inflation rate in 2000 to ease further, ranging from 6.0-7.0 percent.” 

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