Year-on-year headline inflation for the whole year of 2014 averaged 4.1 percent, within the Government’s inflation target range of 4.0 percent ± 1.0 percentage point for the year. This was the sixth consecutive year that the average inflation rate has been within the government target. Inflation in December eased further to 2.7 percent from 3.7 percent in November, and was likewise within the BSP’s forecast range of 2.4-3.2 percent for the month. Similarly, core inflation—which excludes certain food and energy items to better capture underlying price pressures—slowed down to 2.3 percent in December from 2.7 percent in the previous month. On a month-on-month seasonally-adjusted basis, inflation was unchanged at -0.1 percent in December.
The lower December inflation reading was due mainly to slower increases in the prices of food and selected non-food items. Food inflation edged lower as all food commodities posted slower price increases due to ample domestic supply. Likewise, non-food inflation eased further owing to a downward adjustment in electricity rates resulting from lower generation charges in the Wholesale Electricity Spot Market as well as price reductions in kerosene, LPG, diesel, and gasoline.
Governor Amando M. Tetangco, Jr. said that the actual inflation in December continues to affirm the BSP’s assessment of a manageable inflation environment over the policy horizon. Going forward, the BSP will continue to monitor evolving economic and financial conditions to ensure price stability conducive to a balanced and sustainable economic growth.