The country’s overall inflation slowed down further to 2.8 percent in January mainly due to slower price increases of food and non-alcoholic beverages and housing, water, electricity, gas and other fuels.
January’s rate is the slowest in three years — since the 2.3 percent inflation rate recorded in October 2020. It was also slower than the previous month’s 3.9 percent.
Core inflation, which excludes selected food and energy items, decelerated to 3.8 percent in January 2024 from 4.4 percent in the previous month. In January 2023, core inflation was higher at 7.4 percent.
Claire Dennis Mapa, national statistician and civil registrar general, said the downtrend was primarily brought about by the slower annual increment of food and non-alcoholic beverages at 3.5 percent in January 2024 from 5.4 percent in the previous month.
“Also contributing to the downtrend was housing, water, electricity, gas and other fuels with slower annual increase of 0.7 percent during the month from 1.5 percent in December 2023,” Mapa said.
He said lower annual increments were also noted in the indices of alcoholic beverages and tobacco; clothing and footwear; furnishings, household equipment and routine household maintenance; health; recreation, sport and culture; restaurants and accommodation services; and personal care, and miscellaneous goods and services.
Annual decreases were also noted in the indices of transport and financial services.
“On the contrary, the index of education services exhibited a higher annual increase of 3.8 percent during the month from an annual increment of 3.5 percent in December 2023,” Mapa said.
The index of information and communication remained at its previous month’s annual rate of 0.5 percent.
Consistent with BSP
Eli Remolona Jr., Bangko Sentral ng Pilipinas (BSP) governor, said the outturn is “consistent with the BSP expectations that inflation will likely moderate in the first quarter of the year due largely to negative base effects and some easing of supply constraints affecting key commodities.”
Semolina, however, said inflation could temporarily accelerate above the target range from the second quarter “due to the impacts of El Niño weather conditions and positive base effects.”
“The balance of risks to the inflation outlook still leans significantly towards the upside. Key upside risks are associated with potential pressures emanating from higher transport charges, increased electricity rates, higher oil prices, and higher food prices due to strong El Niño conditions. Meanwhile, the impact of a relatively weak global recovery and the government measures to mitigate the effects of El Niño could ease some price pressures,” Remolona said in a statement.
Continuous monitoring
NEDA Secretary Arsenio M. Balisacan, meanwhile, assured the public “that the government would continue monitoring food supply and prices in the country in anticipation of the El Niño phenomenon spreading across more areas, as inflation in January further eased.”
“The Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) will continue to closely monitor the prices of rice and other goods to provide the President and the Cabinet with timely and appropriate policy recommendations and ensure stable and affordable prices of commodities,” Balisacan said.
“We introduced stop-gap measures, as necessary, such as allowing further imports on key commodities until our supply stabilizes at prices affordable to consumers while ensuring remunerative prices for local producers,” he added.
Balisacan said the Department of Agriculture would continuously monitor on-the-ground situations and adequately guide the government in addressing food production concerns.
Support to economic recovery
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said inflation already back to within the central bank’s target range of between 2 and 4 percent “would further support the economic recovery narrative, amid the faster growth in purchasing power compared to slower net increase in the prices especially into 2024.”
“Provided no escalation of geopolitical risks particularly on the Israel-Hamas war and the potential effects on world oil prices, also provided no El Nino drought damage that tends to increase food prices, headline inflation could still be well within the BSP inflation target to 3 percent by February-April 2024,” Ricafort said.
Following the trend at the national level, the Philippine Statistics Authority said inflation rate in the National Capital Region (NCR) also decelerated to 2.8 percent in January 2024 from 3.5 percent in December 2023, mainly influenced by the slower annual increase in the housing, water, electricity, gas and other fuels index.
