December ’10 inflation seen between 2.5%-3.4%
MANILA– The Bangko Sentral ng Pilipinas (BSP) sees rate of price increases in December 2010 to fall within the range of 2.5 to 3.4 percent with the lower utility rates seen to offset seasonal increases in the prices of domestic petroleum products and vegetables.
Inflation last November stood at three percent, an uptick from month-ago’s 2.8 percent, because of higher utility rates bringing the average in the first 11 months this year to 3.8 percent.
Rate of price increases in December 2009 was revised to 4.3 percent from 4.4 percent.
“December inflation within this range should cause the full-year average inflation rate to be below the mid-point of our target range for 2010 of 3.5-5.5 percent,” BSP Governor Amando Tetangco Jr. said in a text message to reporters.
The central bank chief said “outlook for inflation over the policy horizon remains favorable.”
Monetary officials see inflation to remain low in 2011 thus, target range for rate of price increases in 2011-2012 is between three to five percent.
This low-inflation environment made central bank’s policy-making Monetary Board (MB) maintain central bank’s record-low policy rates for 12th consecutive policy meetings from July 2009 to November this year.
To date, BSP’s overnight borrowing or reverse repurchase (RRP) facility rate is at four percent while the overnight lending or repurchase (RP) facility rate is at six percent.
These have been steady after a total of 200 basis points cut from December 2009 to July 2009.
Monetary officials said there is no need yet to hike the policy rates given the low inflation environment in the country although they are wary of the upside risks to inflation like the oil price increases as well as possible fare increase next year.
Analysts earlier projected the MB to tighten rates starting the first half of this year but latest assessments show a possible increase in the BSP rates in the first half of 2011.
“Nevertheless, we continue to monitor developments, particularly in the global front, for potential sources of surprises which could impact domestic demand conditions and price expectations,” Tetangco added.*PNA
