Philippines vows to stay vigilant on prices even as target hit
PHILIPPINE inflation returned to target in 2024 after missing it for two straight years, yet authorities vowed to remain vigilant as upside risks remain.
Consumer prices rose 2.9 per cent from a year ago in December, bringing average inflation last year to 3.2 per cent, the Philippine Statistics Authority said on Tuesday (Jan 7). That’s well within the government’s 2 to 4 per cent goal.
Bangko Sentral ng Pilipinas (BSP) governor Eli Remolona, in a separate statement on Tuesday, citing a presentation made to President Ferdinand Marcos Jr, said that they are “seeing fruit of our efforts in bringing down inflation”, enabling the BSP to cut the key rate by a total 75 basis points in 2024. Authorities won’t be complacent, the governor said.
“It’s always good to be prepared,” Marcos was quoted in the BSP statement as saying after Remolona pointed out that prices of certain commodities may rise due to geopolitical tensions and adverse weather.
Price increases averaged 6 per cent in 2023 and 5.8 per cent in 2022 – breaching the target band, driven mainly by supply disruptions. That prompted the BSP to implement its most aggressive monetary tightening in two decades that took borrowing costs to a 17-year high.
The central bank “remains ready to respond when necessary, guided by its data-dependent approach”, it said in Tuesday’s statement.
The central bank capped 2024 with a third quarter-point rate cut in December, as inflation remained on target and economic growth slowed. Even the core price gauge trended down, indicating more stable prices, the BSP said.
It signalled though that any further easing will come at a measured pace amid potential price risks over incoming US president Donald Trump’s threat to broadly impose tariffs.
“Complacency is not an option, as upside risks to inflation remain,” the central bank said on Tuesday. Remolona said last month the BSP was open to cutting rates further at its first policy meeting this year, scheduled on Feb 20. BLOOMBERG
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