Year-on-year headline inflation for 2018 averaged at 5.2 percent and was above the Government’s inflation target range of 3.0 percent ± 1.0 percentage point for the year. Headline inflation decelerated further to 5.1 percent year-on-year in December 2018 from 6.0 percent in the previous month. Likewise, core inflation—which excludes selected volatile food and energy items to measure underlying price pressures—eased to 4.7 percent in December from 5.1 percent in November. Month-on-month seasonally-adjusted headline inflation also remained negative in December at -0.4 percent from -0.3 percent in the previous month.
The slowdown in Inflation rate for both food and non-food items weighed down on overall inflation in December 2018. Food inflation moderated further during the month as most food items posted lower year-on-year inflation rates while inflation for large-weighted commodities such as rice also fell with the ongoing harvest season and additional supply from rice imports. Similarly, non-food inflation also slowed down due primarily to lower transport inflation. This in turn was due mainly to the decline in international oil prices as reflected in the downward price adjustments of domestic petroleum products and the provisional rollback of the passenger jeepney minimum fare in selected areas.
This latest inflation reading further confirms the BSP’s assessment that price pressures have started to dissipate with inflation expected to fall within target for 2019 and 2020. The BSP nevertheless continues to keep a close watch over price developments and shall consider this latest development and all other relevant information at its next monetary policy meeting to ensure that the monetary policy stance remains consistent with its price stability objective.