2.7% January inflation is within expectations – BSP

While consumer prices in the Philippines rose by 2.7 percent in January, the fastest pace in 26 months, the Bangko Sentral ng Pilipinas (BSP) said the inflation rate was within expectations.

"Inflation in January of 2.7 percent was reported to be due to higher increments in clothing and footwear, health and transport, among others. It is within the BSP forecast range of 2.3- to 3.2-percent, consistent with our expectation that inflation will follow a slow path to within the target range," BSP Governor Amando M. Tetangco Jr. said in a text message to reporters on Tuesday.

The National Economic and Development Authority (NEDA) earlier Tuesday said higher prices of housing, water, electricity, gas and other fuels drove inflation higher in January 2017 from 2.6 percent in December 2016.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said the latest inflation numbers were expected and that inflation will continue to accelerate this year.

"I expect it to grow slowly as the year the goes on. I am projecting 2.9-percent inflation for the year, but it seems it would fall in the range of 3 to 4 percent due to much uncertainty in the external environment," he said.

"I will by adjusting my forecast quarterly moving forward. However, there are no compelling reasons to change the current forecast," he added.

The central bank has set an inflation target of 2 to 4 percent for 2017.
"We are closely monitoring developments, including the emerging form and magnitude of the tax reform program as well as those on the external front, and their impact on our own price and growth dynamics," Tetangco said.

"We will consider these at our policy meeting this week," he added.

The policy-setting Monetary Board is scheduled to meet on Thursday to discuss whether or not to tweak current policy settings. — VDS, GMA News