Inflation remained high in Jan. — BSP

HEADLINE INFLATION likely settled within the 7.5% to 8.3% range in January due to a rise in power and water rates, and higher pump prices, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.   

The BSP’s month-ahead forecast range indicates that inflation may have been faster than the 14-year high of 8.1% in December and the 3% seen in January 2022.   

The upper end of the forecast or 8.3% would also be the fastest pace since the 9.1% print in November 2008 amid the global financial crisis.

January would also mark the 10^th straight month that inflation surpassed the BSP’s 2-4% target range.

The Philippine Statistics Authority will report January inflation data on Feb. 7.   

“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 a statement.   

Manila Electric Co. (Meralco) earlier said the overall rate for a typical household went up PHP 0.6232 to PHP 10.9001 per kilowatt-hour (kWh) in January.   

Metro Manila’s two main water concessionaires also began implementing higher rates in January.

Starting January, Manila Water raised rates by PHP 8.04 per cubic meter, while Maynilad hiked rates by PHP 3.29 per cubic meter.

Fuel retailers continued to implement price hikes in January. For the month, pump price adjustments stood at a net increase of PHP 7.2 a liter for gasoline, PHP 3.05 a liter for diesel, and PHP 4.55 per liter for kerosene.      

“Meanwhile, the reduction in LPG prices as well as the peso appreciation could contribute to easing price pressures for the month,” the central bank said.   

Cooking gas prices declined by PHP 4.20 per kilogram in January after two straight months of price hikes.   

The peso also rebounded to the PHP 54-a-dollar mark in January, closing the month at PHP 54.64 on Tuesday, up by PHP 1.115 or 2.04% from its PHP 55.755 finish on Dec. 29, 2022.

“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.”   

BSP Governor Felipe M. Medalla earlier signaled more policy rate increases in the first quarter this year to ensure inflation falls within the 2-4% target range by the second half.   

The Monetary Board is scheduled to have its first policy meeting this year on Feb. 16.

The BSP sees headline inflation averaging 4.5% this year, lower than the actual 5.8% recorded in 2022. — Keisha B. Ta-asan