January Inflation Drops Further to 2.8 Percent

Headline inflation dropped further to 2.8 percent year-on-year in January 2024 from 3.9 percent in December 2023. This is at the low end of the BSP’s forecast range of 2.8-3.6 percent for the month and within the Government’s inflation target range of 3.0 percent ± 1.0 percentage point for the year. On a month-on-month seasonally adjusted basis, headline inflation declined to -0.1 percent in January 2024 from 0.1 percent in the previous month. Core inflation, which excludes selected volatile food and energy items and measures underlying demand-side price pressures, likewise decelerated further to 3.8 percent year-on-year in January from 4.4 percent in the previous month.

Most major commodity groups registered lower year-on-year inflation rates in January compared to the previous month. Lower food inflation accounted for the bulk of the decline in headline inflation, as prices of vegetables and meat fell while inflation for fish and other seafood slowed. Non-food inflation also moderated as a result of slower price increases of housing, water, electricity, gas and other fuels, along with the decline in transport inflation.

The latest inflation print is consistent with the BSP’s outlook that inflation will likely moderate in Q1 2024 due largely to negative base effects and the easing of supply constraints affecting key commodities. The Monetary Board will continue to monitor price developments and will carefully consider the new data at its upcoming meeting on monetary policy this month, in keeping with the BSP’s mandate to promote price stability.