Inflation rate in December may settle at the higher end of the government’s target range on stable foreign exchange rate and petroleum prices.
The Bangko Sentral ng Pilipinas (BSP) on Friday predicted that inflation in December would settle within a range of 3.6 percent to 4.4 percent. The Philippine Statistics Authority will release the official data in January.
The midpoint of the BSP forecast at 4.0 percent represents the higher end of the government’s target range of 2 percent to 4 percent for the year and was in line with the figure in November.
“Higher prices of rice and meat are seen as the primary sources of upward price pressures in December,” the BSP said.
“Meanwhile, lower prices for agricultural items such as vegetables, fruits, and fish along with lower electricity rates and petroleum prices are expected to contribute to downward price pressures,” it said.
Strong inflows of remittances kept the foreign exchange rate stable at P55.5 against the US dollar in recent weeks, and together with the decreased prices of crude oil in the world market, helped ease pressures on local consumer prices.
The BSP said it would continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy decision-making.
Data from the Philippine Statistics Authority (PSA) showed that inflation eased to 4.1 percent in November from 4.9 percent in October and 6.1 percent in September.
The November inflation brought the average rate to 6.2 percent, exceeding the BSP’s 2 percent to 4 percent target for the year.
The Development Budget Coordination Committee (DBCC) earlier said the average inflation rate for 2023 was expected to settle at 6 percent.
BSP Governor Eli Remolona Jr. said the BSP was unlikely to cut interest rates in the next few months.
The policy-making Monetary Board earlier kept the overnight borrowing rate unchanged at 6.50 percent and the overnight deposit and lending facilities at 6.0 percent and 7.0 percent.
Remolona said, however, the BSP may consider cutting interest rates if the “numbers point to the right direction” and the inflation rate settles around 3 percent.
The government also expects an inflation rate of 2 percent to 4 percent between 2024 and 2028.