Consumer prices rise 3% in January

After the double-digit mark-up in costs of tobacco and beverage products and select commodities, the National Statistics Office (NSO) on Tuesday reported that consumer prices rose faster to 3 percent in January, the highest since October last year.

 

Last month's inflation number  was near the higher end of the central bank's 2.5 to 3.4 percent outlook for January. 

 

NSO data showed that January inflation was faster than December's 2.9 percent, but a percentage point slower than the 4 percent registered in January last year.

 

Core inflation, which excludes volatile price movements of items such as food and energy, also went up to 3.6 percent  in January from 3.3 percent in December.

 

The NSO noted a double-digit annual hike in the index for alcoholic beverages and tobacco, which climbed by 17.3 percent from 5.1 percent in December.

 

Increases  were, likewise, reported in the following indices: 

 

The heavily weighted food and non-alcoholic beverages index, however, was steady at 2.3 percent in January, the NSO said. 

 

The central bank inflation target for 2013 is at 3 to 5 percent. Economists' expectations

 

In an email, Prakriti Sofat, Singapore-based economist at Barclays, said they continue to expect monetary authorities to keep policy rates on hold in the short-term.

 

"Our base case remains for the BSP (Bangko Sentrla ng Pilipinas) to raise the policy rate by 25 bps (basis points) in Q4 to 3.75 percent," she said.  

 

Sofat, however, sees the Bangko Sentral further cutting down rates of its Special Deposit Accounts (SDA) to have "more degrees of freedom to manage FX (foreign exchange) volatility."

Special deposit accounts  

Last month, the central bank rationalized SDA  at a single 3 percent rate, essentially cutting down the rates which were priced a premium over policy rates. 

 

Policy rates currently stand at 3.5 percent for overnight borrowing and 5.5 percent for overnight lending. - VVP, GMA News