Aligning with BSP’s Outlook, Steps Taken to Ease Inflation

BSP says Dec. 2023 inflation at 3.9% consistent with 2024 outlook

The Bangko Sentral ng Pilipinas (BSP) announced on Friday, January 5, that the latest consumer price index (CPI) of 3.9 percent for the month of December 2023 is within its forecast range and remains consistent with its 2024 outlook of decelerating inflation.

The BSP immediately noted after the government’s CPI December announcement that the latest inflation is within its forecast range of 3.6 percent to 4.4 percent, as well as on point with its full-year CPI forecast of six percent.

According to the BSP, the latest inflation of 3.9 percent brings the full-year average inflation to six percent, which is consistent with the BSP’s projections that inflation will likely moderate in the near term due to easing supply-side price pressures and negative base effects.

BSP Governor Eli M. Remolona Jr. has said on Friday that he prefers the risk-adjusted inflation forecasts because these numbers take into consideration events or factors that are expected to happen at some point in time. Meanwhile, baseline estimates are based on events that have already transpired.

The BSP continues to note that the impact of a relatively weak global recovery as well as government measures to mitigate the effects of El Niño could reduce the central forecast. Remolona said the BSP expects inflation will settle within the target in the first quarter of 2023 but will temporarily exceed four percent again in April to July due to base effects and El Niño’s impact on prices of food and electricity.

The BSP announced its decision to keep the two percent to four target band until 2026, signaling its commitment to bring inflation to a target-consistent path over the medium term. As an inflation-targeting central bank, the BSP is committed to keeping a “low and stable” inflation, which refers to the rate of change in the average prices of goods and services typically purchased by consumers.

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