MANILA, Jan 5 — The Philippine central bank said on Thursday (December 29, 2023) it was ready to take all policy action necessary, as upward pressure on consumer prices pushed inflation in December to the highest since 2008.
The consumer price index rose 8.1 per cent in December from a year earlier, driven mainly by higher food and energy prices, the statistics agency said.
Last month's inflation figure was below the 8.2 per cent median forecast in a Reuters poll, but within the central bank's 7.8 per cent to 8.6 per cent forecast for December.
It brought the full-year average to 5.8 per cent, also a 14-year high and above the official 2 per cent to 4 per cent target band.
"Upside risks continue to dominate the inflation outlook up to 2023, while remaining broadly balanced in 2024," the Bangko Sentral ng Pilipinas (BSP) said in a statement.
"The BSP remains prepared to take all monetary policy action necessary to bring inflation back to a target-consistent path over the medium-term."
The same 2 per cent to 4 per cent inflation target has been set for 2023.
"(Price) pressures are broad based and should result in only a slow grind lower for inflation in 2023," said Nicholas Mapa, a senior economist at ING.
Core inflation, which excludes volatile food and energy components, rose to 6.9 per cent in December from 6.5 per cent in November.
Food inflation increased to 10.6 per cent in December from the prior month's 10.3 per cent, reflecting spikes in prices of vegetables, sugar, rice and other agricultural commodities due to weather disturbances and holiday demand.
The BSP raised its benchmark interest rate by a total of 350 basis points last year to curb inflation and support a weak peso amid aggressive tightening moves by the US Federal Reserve.
The BSP holds its first policy meeting of the year on February 16.
"Local policy rates would still likely match any future Fed rate hikes that have been smaller recently, towards 6 per cent levels by early 2023," said Michael Ricafort, an economist at Rizal Commercial Banking Corp in Manila.
— Reuters
