Inflation to remain elevated in January — BSP

Inflation is expected to remain elevated this month despite the projected deceleration from the 14-year high in December due to the higher prices of utilities and commodities, the Bangko Sentral ng Pilipinas (BSP) reported Tuesday.

The central bank said it projects inflation to fall within 7.5% to 8.3%, following the 8.1% recorded in December which was the fastest since the 9.1% recorded in November 2008.

The latest forecast range is higher than the 2% to 4% target of the government.

“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,” the BSP said in an emailed statement.

The Manila Electric Company (Meralco) hiked its overall rates for typical household customers by 62.32 centavos per kilowatt-hour (/kWh) to P10.9001/kWh this month, translating to an increase of around P125 in the total bill of a residential customer consuming 200 kWh.

Pump prices have also been hiked in four of the five weeks of January, with year-to-date net increases at P5.90 per liter for gasoline, P2.05 per liter for diesel, and P3.20 per liter for kerosene as of January 24, 2023.

The BSP noted, however, that the increases could be offset by the reduction in the prices of liquefied petroleum gas (LPG) as firms rolled back prices by as much as P4.20 per kilogram during the month.

It also cited the appreciation of the Philippine peso, which has returned to the P54:$1 level after hitting an all-time low of P59:$1 last year.

BSP Governor Felipe Medalla in December said he expects inflation to start normalizing this month after peaking in December, and return to “normal” by the third or fourth quarter of the year.

“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 said Tuesday.—AOL, GMA Integrated News