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2011 Average Inflation is Within Government Target

01.05.2012

Year-on-year headline inflation for the whole year of 2011 averaged 4.4 percent and 4.8 percent using the 2000-based Consumer Price Index (CPI) series and 2006-based CPI series, respectively, well within the Government’s target range of 3-5 percent for the year. Inflation in December dropped to 4.0 percent (2000-base year) and 4.2 percent (2006-base year) from 4.7 percent and 4.8 percent, respectively, in November.

The lower December inflation reading, which was within the BSP’s forecast for the month of 4.0-4.9 percent, was due mainly to the reductions in the prices of selected food items such as rice, vegetables and sugar, as domestic supply remained sufficient. The general downward adjustments in the prices of gasoline and diesel nationwide also contributed to the slowdown in December inflation. Core inflation, which excludes certain food and energy items to measure generalized price pressures, also declined to 3.4 percent in December from 3.7 percent in the previous month based on the 2000 CPI basket, bringing the 2011 average core inflation to 3.6 percent.

Governor Amando M. Tetangco, Jr. noted that the BSP’s latest baseline inflation forecasts continue to show within-target average inflation for 2012 and 2013. The downside risks associated with the continued weakness in global economic growth and the subsequent moderation in global demand and commodity price pressures are expected to contribute to a manageable inflation environment going forward.  He stressed that the BSP continues to monitor emerging price and economic developments on both the domestic and international fronts to ensure that monetary policy settings remain in line with the price stability objective while being supportive of domestic economic activity.

View  Table 1  |  Table 2

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