LONDON: Headline inflation inched up to 1.1 percent in the first three months of the year on the back of “modest upticks” in selected food items, the Bangko Sentral ng Pilipinas (BSP) reported on Friday. Central bank data showed headline inflation was at 1.0 percent in the fourth quarter of 2015 and 2.5 percent in the first quarter of 2015. The BSP has set an inflation target of 2 to 4 percent from 2016 to 2018.
“Domestic financial market conditions remain stable, supported by strong macroeconomic fundamentals,” BSP Deputy Director Dennis D. Lapid told reporters in a briefing on Friday.
The inflation reading in January to March was a reflection of increase in prices of selected food items, Lapid noted. Prices of non-food items were steady as declines in utility rates were countered by increases in other items such as transport fares. Headline inflation registered at 1.3 percent in January, 0.9 percent in February, and 1.1 percent in March. Inflation – the rate at which consumer prices move – is expected to register at the lower end of this year’s 2 to 4 percent target, Lapid said. “Inflation will settle close to the lower end for 2016… We can expect a gradual rise toward the midpoint of the target for 2017,” he said.
Inflation risks remain tilted toward the downside, according to the central bank official, with expectations of slower global economic activity and lower global oil prices and transport fares. The upside risks include power rates and utility adjustments, the impact of El Niño, and a possible La Niña in the second half of 2016. “There is an overall downward shift in inflation projection,” Lapid noted.
