Year-on-year headline inflation increased to 2.9 percent in January 2020 from 2.5 percent in December 2019. The higher inflation outturn, which was within the BSP’s expected range of 2.5-3.3 percent for the month, was also close to the midpoint of the Government’s inflation target range of 3.0 percent ± 1.0 percentage point for the year. Likewise, core inflation—which excludes selected volatile food and energy items to measure underlying price pressures—rose to 3.3 percent in January 2020 from 3.1 percent in the previous month. On the other hand, month-on-month seasonally-adjusted inflation slowed down to 0.4 percent in January 2020 from 0.8 percent in December 2019.
Year-on-year inflation rates of most key food items such as, meat, fish, fruit, and vegetables increased during the month as weather-related disturbances affected domestic supply conditions. At the same time, the implementation of the higher excise tax on tobacco products also drove inflation higher in January 2020. Meanwhile, upward price adjustments of domestic petroleum products also contributed to higher non-food inflation during the month.
The latest inflation outturn is in line with the BSP’s prevailing assessment that inflation will gradually pick up to approach the midpoint of the Government’s 2-4 percent target range in 2020 and 2021. The BSP will consider all the latest developments in the Monetary Board’s assessment of domestic and external conditions in its meeting on 6 February 2020. Going forward, the BSP will closely monitor economic developments here and abroad to ensure that the monetary policy stance remains consistent with the BSP’s price stability objective while being supportive of economic growth.