Inflation rate eases to 2.7 pct in December

MANILA, Philippines (Xinhua) - The Philippine Statistics Authority reported today the country's inflation rate eased to 2.7 percent in December from 3.7 percent in November.

Without food and oil prices, core inflation also went down to 2. 3 percent last month from 2.7 percent in November.

The December inflation rate brought the full-year average to 4. 1 percent, well-within the three to five percent target range. This marks the sixth consecutive year inflation fell within the target range, Philippine central bank governor Amando M. Tetangco, Jr. said.

"The significant decline in international oil prices is a dampener on domestic inflation as this has led to lower domestic pump prices, lower transport costs, and lower prices of some imported commodities. However, we are watchful of reversals in this trend," he said.  

For 2015 and 2016, the inflation path remains within the two to four percent goal for both years, Tetangco said.

The latest level is the slowest pace recorded since inflation hit 2.1 percent in August 2013, giving the Bangko Sentral ng Pilipinas room to maintain the current stance of policy.

"Given the manageable inflation outlook over the policy horizon, there may be greater scope in the months ahead for policymakers to focus on facilitating and maintaining supportive conditions for domestic demand," Tetangco said during the first Tuesday Club meeting of the year.

"This time, the assessment is that the stance of policy remains appropriate but we continue to monitor and we will be prepared to make adjustments as may be appropriate or necessary in the future, " he added.

Monetary authorities during its two last rate-setting meetings in 2014 kept key policy rates steady as inflation expectations aligned with the target ranges until 2016. The BSP in the third quarter of last year raised the overnight borrowing and overnight lending rates by a total of 50 basis points to ensure the inflation targets will be met.