Inflation hits two-year high in January

Philippine inflation quickened to its fastest pace in over two years last January as the cost of food and beverage lifted prices higher, the National Statistics Office (NSO) reported Wednesday. 

 

NSO said inflation climbed to 4.2 percent at the beginning of the year, compared to 4.1 percent in December 2013 and 3.1 percent in January 2013. 

 

The latest inflation rate, the highest since 4.7 percent was recorded in November 2011, was near the upper end of the 3.4 to 4.3 percent forecast by Bangko Sentral ng Pilipinas for January. 

 

"This was mainly effected by higher annual increment in the heavily-weighted food and non-alcoholic beverages index," the report noted. 

 

Prices of clothing and footwear; furnishing, household equipment and routine house maintenance, as well as health-related expenses, recreation and culture also rose last month. 

 

The rise in consumer prices was "within expectations and is cost-pushed," Bank of the Philippine Islands economist Nicholas Antonio Mapa said over the phone Wednesday. 

 

In a statement to reporters, Bangko Sentral Governor Amando Tetangco Jr. said while the policy rate environment remains appropriate for now, they are already evaluating changing inflation dynamics. 

 

"We still have room to keep rates steady, but given how these factors play out, that room may be narrowing," he said. 

 

Noting the key policy rate will likely be kept at a record low 3.5 percent when the Monetary Board meets on Thursday, Mapa said a change in the policy tone of Bangko Sentral may mean the onset of tightening the flow of money. 

 

"The BSP is watchful that price pressures may be building from financial volatility and intervention particularly in the forex spot market cannot be ruled out," he said. 

 

The Monetary Board has kept policy rates at record lows since October 2012. – VS, GMA News