Headline inflation decelerated to 2.4 percent year-on-year in January from 2.7 percent in December. The January inflation reading was within the BSP’s range forecast of 1.8-2.7 percent for the month, and was also within the Government’s inflation range target of 3.0 percent± 1.0 percentage point for 2015. Similarly, core inflation—which excludes certain volatile food and energy items to better capture underlying price pressures—fell marginally to 2.2 percent in January from 2.3 percent in the previous month. On a month-on-month seasonally-adjusted basis, inflation increased to 0.3 percent in January after declining by 0.1 percent in December.
The continued deceleration of headline inflation in January was attributed largely to lower prices of selected non-food items. In particular, non-food inflation slowed down due mainly to the reduction in the pump prices of diesel and gasoline (in turn reflecting the continued decline in international oil prices) as well as the downward adjustment in electricity rates due, in turn, to lower generation charges. At the same time, food inflation also eased slightly on slower price increases of key food items, particularly rice, corn, meat, milk, oils, and sugar.
Governor Amando M. Tetangco, Jr. said that the latest inflation reading is in line with the BSP’s assessment of a manageable inflation environment over the policy horizon. Looking ahead, the BSP will remain vigilant in monitoring economic, financial, and external developments and stand ready to undertake appropriate measures as needed to ensure price stability conducive to balanced and sustainable economic growth.