January Inflation Hits 4.2%

Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—Headline inflation rose slightly to 4.2 percent year-on-year in January from 4.1 percent in December. The January inflation reading was within the BSP’s forecast of 3.4-4.3 percent for the month, and was also within the Government’s inflation target range of 4.0 percent ±  1.0 percentage point for 2014.

Core inflation—which excludes certain food and energy items to better capture generalized price pressures—was steady at 3.2 percent. Meanwhile, seasonally-adjusted month-on-month headline inflation decelerated slightly to 0.5 percent in January from   0.6 percent in the previous month.

The slightly higher January headline inflation rate was traced mainly to higher prices of food and selected non-food items. Food inflation increased as key food items particularly rice, meat, fish, milk, oils, vegetables, and sugar, posted higher prices due to some tightness in domestic supply conditions triggered by recent weather-related production disruptions.

The recent upward trend in inflation therefore appears to stem mainly from supply shocks, the impact of which are expected to be transitory. Non-food inflation also rose as a result of higher prices of clothing and footwear, furnishing and household equipment, and health-related products.

The BSP will continue to keep a close watch on developments in both the global and domestic fronts to see if there is any change to the balance of risks to the inflation outlook over the policy horizon and make adjustments to the stance of policy as warranted.