MANILA, Philippines — Security Bank Corp. said inflation likely accelerated to two percent in December after bottoming out at a 43-month low of 0.8 percent in October.
Robert Dan Roces, chief economist at Security Bank, said inflation this year likely averaged 2.5 percent after accelerating to 5.2 percent in 2018.
“Our headline inflation rate call for December is two percent year-on-year with our model’s forecast range at 1.7 to 2.2 percent, pegging average inflation for the year to 2.5 percent,” Roces said.
He said the month-on-month price growth is estimated to be consistent at 0.2 percent, or a steady price growth trajectory amid higher demand for select commodities during the holiday season, plus electricity and fuel price changes.
“We see uptick in prices for selected food items as well as alcoholic beverages and tobacco, and upward price adjustments in electricity rates (due to a higher generational charge) plus uptrends in diesel, gasoline, and kerosene prices,” he said.
The last time inflation topped two percent was last July at 2.4 percent.
Roces pointed out rice prices have been relatively stable with the fulfillment of shipments for imported rice, plus the end of the harvest season that ensures more than enough supply in the market.
The benign inflation environment and slower-than-expected gross domestic product (GDP) allowed monetary authorities to partially unwind its easing cycle that saw interest rates rise by 175 basis points last year.
The BSP rolled back rates by 75 basis points and also lowered the reserve requirement ratio for big and mid-sized banks by 400 basis points and for small banks by 200 basis points to free up more funds to boost the economy.