Headline inflation decelerated further to 4.4 percent year-on-year in January 2019 from 5.1 percent in December 2018. The latest inflation reading was above the Government's inflation target range of 3.0 percent 1.0 percentage point for the year. Nevertheless, core inflation�which excludes selected volatile food and energy items to measure underlying price pressures�has also slowed down, to 4.4 percent in January from 4.7 percent in the previous month. Month-on-month seasonally-adjusted headline inflation rose to 0.1 percent in January 2019 from -0.4 percent in December 2018.

Food inflation continued to ease in January 2019, reflecting improved domestic food supply conditions. In particular, rice inflation also moderated for the third consecutive month due to the arrival of rice imports and increased supply from the recent harvest. At the same time, non-food inflation decelerated as a result of slower price increases of clothing and year-on-year decline in inflation for operation of personal transport equipment. Electricity rates also decreased during the month owing to lower generation charges. These changes offset the faster price increases in furnishings, household equipment, and routine house maintenance.

The latest inflation outturn continues to support the BSP's prevailing assessment that price pressures have started to dissipate with average inflation expected to fall within the Government's 2-4 percent target range for both 2019 and 2020. The inflation release will be taken into consideration along with other incoming data during the Monetary Board's upcoming monetary policy meeting in order to ensure that the monetary policy stance remains consistent with the BSP's primary mandate of price stability.

Source: Bangko Sentral ng Pilipinas (BSP)