2019 Average Inflation Falls Within Government Target

Year-on-year headline inflation for the whole year of 2019 averaged at 2.5 percent, well within the Government's target range of 3.0 percent 1.0 percentage point for the year. Inflation in December 2019 rose to 2.5 percent year-on-year from 1.3 percent in the previous month and was within the BSP's expected range of 1.8-2.6 percent for the month. Likewise, core inflation which excludes selected volatile food and energy items to measure underlying price pressures rose to 3.1 percent in December from 2.6 percent in the previous month. Month-on-month seasonally-adjusted inflation also increased to 0.8 percent in December from 0.2 percent in November.

Food inflation picked up in December as tight domestic supply conditions, triggered by weather-related supply constraints, led to higher prices of fish and vegetables. Meanwhile, non-food inflation also increased as a result of the upward adjustment in electricity rates due to higher generation charges. At the same time, prices of domestic petroleum products rose, reflecting higher oil prices in the international market.

The latest inflation outturn remains consistent with the BSP's prevailing assessment that inflation will gradually pick up to approach the midpoint of the Government's 2-4 percent target range in 2020 and 2021. Going forward, the BSP will continue to closely monitor the outlook for inflation as well as emerging developments in output conditions here and abroad to ensure that the monetary policy stance remains consistent with the BSP's price stability objective.

Source: Bangko Sentral ng Pilipinas