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2017 Average Inflation is Within Government Target

01.05.2018

Year-on-Year headline inflation for 2017 averaged at 3.2 percent, well within the Government’s target range of 3.0 percent ± 1.0 percentage point for the year. Inflation in December was stable at 3.3 percent, in line with BSP staff forecasts. Likewise, month-on-month seasonally-adjusted headline inflation was steady at 0.3 percent in December. By contrast, core inflation—which excludes certain volatile food and energy items as a means to depict underlying price pressures—eased to 3.0 percent in December from 3.3 percent in the previous month.

December inflation held steady as higher prices for selected food items as well as alcoholic beverages and tobacco were counterbalanced by the slower price increases of non-food commodities. The onset of the holiday season alongside weather-related production disruptions pushed prices of meat, fruit, fish, and corn higher while rice prices also increased slightly with the end of harvest in some areas. However, this was offset by downward price adjustment in electricity rates due to lower generation charges as well as price reductions in liquefied petroleum gas (LPG) and kerosene observed in several provinces.

Governor Nestor A. Espenilla, Jr. noted that the December 2017 inflation continues to affirm the BSP’s assessment of a manageable inflation environment over the policy horizon. Nevertheless, the BSP will remain vigilant against any risks to the inflation outlook to ensure that the monetary policy stance remains consistent with the mandate of maintaining price stability conducive to economic growth.

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