Philippines: BSP eyes consumer price uptick in January

MANILA, Philippines — The Bangko Sentral ng Pilipinas is keeping its eyes peeled on consumer price growth at the start of 2023, as its projection left room for an uptick in January.

In a statement on Tuesday, the BSP projected inflation would land between 7.5-8.3% in January. This means that this month’s reading could see speed past the 8.1% reading in December 2022. 

“Upward price pressures for the month are expected to emanate from higher electricity rates, approved water rate rebasing, higher domestic petroleum prices, uptick in the prices of key food items, and the annual increase in sin taxes,” it added.

The BSP, however, said it expects a reduction in liquefied petroleum gas prices and the peso’s relative gains against the US dollar to ease inflation. 

The rising inflation trend in the past months was partly propelled by an explosion in consumer demand, brought about by the domestic economy’s reopening in the second quarter. This, while supply problems believed to be a byproduct of the pandemic persist.

Despite this, BSP Governor Felipe Medalla said that the BSP forecasts inflation to peak in December, after a surprising inflation outturn in November that was the highest in 14 years.

The BSP projected inflation would slow down in 2023.

Economic managers also forecast inflation would average 5.8% in 2022, conceding that the Philippines already missed its 2-4% annual inflation target.

For 2023, the Marcos Jr. administration is expecting inflation to average 2.5-4.5%. 

“The BSP will continue to adjust its monetary policy stance at the necessary pace to prevent the further broadening of price pressures and monitor emerging price developments closely in accordance with the BSP’s price stability mandate,” the central bank added.