Inflation seen easing to 2.2% in January
MANILA, Philippines — Inflation likely eased in January on the back of lower global oil prices, UnionBank’s Economic Research Unit said Thursday.
In a research note sent to reporters, UnionBank chief economist Ruben Carlo Asuncion said price growth likely softened to 2.2% in January. If realized, this would be slower than 2.5% recorded in December.
Asuncion said lower world oil prices resulted in cuts in local pump prices this month and prompted Meralco, the largest power distributor in the country, to downwardly adjust electricity rates.
Meanwhile, the stabilization of situation in areas affected by the recent Taal Volcano eruption will put “temporary” upward pressure on prices, Asuncion added.
In 2019, inflation averaged 2.5%, settling within the state’s 2%-4% annual target.
Since becoming central bank governor, Benjamin Diokno has given the economy a shot in the arm with a cumulative 75-basis point rate cut in 2019 and a 400-basis point reduction in bank reserves.
Diokno had said it was logical for the central bank to dial back the 175-basis point cumulative hikes fired off in 2018, which saw inflation peak at a near-decade high in September and October amid food supply bottlenecks at the time.
In the same research note, UnionBank’s Asuncion said expectations of lower inflation in January should give monetary authorities enough room to resume slashing interest rates this year.
Asuncion said he is pencilling in a 25-bps cut once the Bangko Sentral ng Pilipinas’ Monetary Board meets first the first time this year on February 6.
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