Philippines: BSP sees early easing of inflation

  • Headline inflation may ease back to the 2% – 4% target earlier than expected in 2018, according to the Bangko Sentral ng Pilipinas.
  • BSP officer-in-charge Diwa Guinigundo said in a text message that the central bank is reviewing its forecasts as inflation eased to a seven-month low of 5.1% in Dec 18.
  • Based on its assessment in 13 Dec 18, the BSP lowered its inflation forecast for 2019 to 3.2% as it expects the rise in consumer prices to ease within the 2% – 4% target in 1Q19 rather than 2Q19.
  • The central bank also slashed its inflation forecast for 2020 to 3% instead of 3.3%.
  • Inflation soared to 5.2% in 2018, exceeding the target range of 2% – 4% for the first time since 2008, from 2.9% in 2017 due to higher oil and food prices as well as weak peso which emerged as the third worst performing currency in the region.
  • Guinigundo had said the supply-driven inflation process in 2018 would not to be persistent and therefore short lived as shown by the negative m/m inflation rate in Dec 18.
  • The BSP deputy governor added the annual impact of the implementation of Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law was less than 1% and diminishing.

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