INFLATION could have risen in January on account of higher fuel prices and adjustments to water rates and sin taxes, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
The central bank 2.5- to 3.3-percent estimate for the month, however, remains within the 2.0- to 4.0-percent target and is still skewed toward a result below December’s 2.9 percent.
Consumer price growth data for January will be released by the Philippine Statistics Authority next week, or on Feb. 5.
“Upward price pressures in January stem from the rise in petroleum prices, increased prices of major food items owing to the lingering effects of recent weather disturbances, as well as the annual adjustments in water rates and sin taxes,” the BSP said in a statement.
“These upward price pressures are expected to be offset in part by lower prices of rice and electricity rates,” it added.
The central bank said it would “continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment.”
In its December Monetary Policy Report that was released earlier this week, the BSP said that inflation risks remained tilted toward the upside for 2025 and 2026 but added that expectations were still well-anchored.
The central bank’s policymaking Monetary Board, during its last rate-setting meeting for 2024, where it ordered another 25-basis point (bps) reduction, said that inflation was likely to stay within target over the policy horizon.
It raised the 2025 risk-adjusted forecast to 3.4 percent from 3.3 percent, however, and kept that for next year to 3.7 percent.
“The balance of risks to the inflation outlook continues to lean to the upside due largely to potential upward adjustments in transport fares and electricity rates,” it said last Dec. 19, adding that the impact of lower import tariffs on rice remains the main downside risk to inflation.
In the policy report, the BSP also noted that a December survey of external forecasters had led to a median forecast of 3.1 percent for both 2025 and 2026 with risks broadly balanced.
Monetary authorities kick-started an easing cycle in August last year as inflation settled within target, cutting the BSP’s policy rate by 25 bps each three times to 5.75 percent.
Another 25-bps reduction is widely expected to be announced when they meet on Feb. 13.
Some analysts have said that a continued decline in inflation could be a reason to pause, but lower-than-expected — and below-target — economic growth in 2024 is expected to lead to continued rate cuts.
The “general view” in the December poll of analysts, the BSP said, is that of rate cuts in the 50- to 75-bps range this year.
Cuts of as much as 100 bps were previously expected, but the outlook has since changed given concerns over the inflationary impact of likely US protectionist measures and fewer Federal Reserve rate reductions.
The US central bank, which lowered its rates by 100 bps in 2024, paused from easing on Wednesday given above-target inflation and strong economic growth.
