Year-on-Year headline inflation increased to 4.0 percent in January from 3.3 percent in December. The higher inflation outturn was at the high end of the Government’s target range of 3.0 percent ± 1.0 percentage point for 2018. Likewise, core inflation—which excludes certain volatile food and energy items as a means to depict underlying price pressures—rose to 3.9 percent from 3.0 percent in the previous month. Month-on-month seasonally-adjusted headline inflation also increased to 0.7 percent in January from 0.3 percent in December.
The uptick in headline inflation for January was traced mainly to higher prices of food and non-alcoholic beverages, alcoholic beverages and tobacco items, and domestic petroleum products. Food inflation went up as most food commodities, particularly corn, meat, and milk, cheese, and eggs, posted higher prices during the month. Meanwhile, weather-related production disruptions pushed up prices of rice, fish, and vegetables in many regions. Similarly, non-alcoholic beverages and alcoholic beverages and tobacco inflation rose as a result of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law. At the same time, transport inflation also increased due to adjustments in gasoline and diesel prices, largely influenced by higher international prices of crude oil and the excise tax on petroleum as prescribed by the TRAIN Law.
Governor Nestor A. Espenilla, Jr. noted that the January 2018 inflation continues to be consistent with the BSP’s view of a manageable inflation environment over the policy horizon, with the average inflation expected to settle around the high-end of the Government’s 2-4 percent target range for the year. Nevertheless, the BSP will remain watchful of evolving price trends and potential risks to the inflation outlook and will continue to assess its monetary policy stance in support of its primary mandate of delivering price stability conducive to a balanced and sustainable economic growth.