INFLATION likely settled further within target in January following price declines for some food items, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.
It forecast a result in the 2.8- to 3.6-percent range, down from December's 3.9-percent result, ahead of this coming Tuesday's release of official data for the month.
"Higher prices of some agricultural items, like rice, meat, fruits, and fish, along with increased petroleum prices, electricity and water rates, annual adjustment in sin taxes, and the depreciation of the peso are the primary sources of upward price pressures for the month," the BSP said in a statement.
"Meanwhile, lower prices of vegetables and sugar could contribute to downward price pressures," it added.
The central 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."
A continued inflation slowdown will heighten speculation as to when key interest rates — currently the highest since 2007 — could start to be lowered by monetary authorities.
The BSP's benchmark rate currently stands at 6.5 percent following 450 basis points of rate hikes beginning May 2022 in response to surging inflation.
The central bank's policymaking Monetary Board has held fire for the last two meetings and is expected to continue doing so for the first half of the year.
BSP Governor Eli Remolona Jr. has said that rate reductions can be expected this year, but hikes cannot be ruled out given continued inflationary risks, particularly the impact of the El Niño weather pattern on food prices.
Remolona also said that if economic growth remained robust, monetary authorities would have more room to hike interest rates should inflation rise anew.
The Philippine Statistics Authority (PSA) on Wednesday reported that the economy grew by 5.6 percent last year, markedly slowing from 2022's 7.6 percent and missing the government's 6.0- to 7.0-percent target.
In a statement issued following the release of the growth report, Socioeconomic Planning Secretary Arsenio Balisacan said that the impact of higher interest rates was a factor in the slowdown.
"Its (the rate hikes') longer-term effects become noticeable a few quarters down the line. So, the slowdown we are currently observing may be the result of past increases in interest rates, particularly those implemented early last year and in 2022," Balisacan said.
Remolona expects inflation to fall within target in the first quarter this year but again top 4.0 percent in the next three months before easing for the rest of 2024.
Read The Rest at :
