Inflation eased to 3% in January, from 3.2% in December. -- Photo by Cathy Rose A. Garcia

By Ana Olivia A. Tirona, Researcher 

Philippine annual inflation eased for the fifth straight month to its lowest level in 15 months in January, as the increase in housing and utilities costs slowed. 

Under rebased 2018 prices, preliminary data from the Philippine Statistics Authority (PSA) showed headline inflation slowed to 3% year on year in January. This was slower compared with 3.2% in December and the 3.7% print in January last year. 

It was the fifth consecutive month that headline inflation decelerated since the 4.4% peak seen in August last year. 

January’s print matched the pace logged in November 2020 and the slowest in 15 months or since the 2.3% inflation rate recorded in October 2020. 

The headline figure also matched the 3% median estimate in a BusinessWorld poll conducted a week ago. 

Moreover, the January print was below the 3.4% forecast but still within the 2-4% target band given by the Bangko Sentral ng Pilipinas (BSP) for this year. 

The PSA attributed the downtrend in the headline print last month to slower inflation for housing, water, electricity, gas and other fuels (4.5% in January from 5.1% in December 2021), as well as restaurants and accommodation (3% from 3.2%) and alcoholic beverages and tobacco (5.6% from 6.2%). 

Also easing last month were health (3.1% from 3.2%); recreation, sport and culture (1.5% from 1.6%); and education services (0.6% from 0.7%). 

Meanwhile, food and non-alcoholic beverages and financial services steadied from December (1.6% and 43.3%, respectively). 

Higher annual increments were also noted in the following: transport (7% from 6.6%); furnishing, household equipment and routine household maintenance (2.4% from 2.1%); personal care, and miscellaneous goods and services (2.2% from 2.1%); clothing and footwear (2% from 1.9%); and information and communication (0.7% from 0.6%). 

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said that rebasing of prices had a “seismic shift” for consumer price index (CPI) levels which will continue throughout the year. 

“The big factor here is the food basket which posted a mere 1.6% gain in prices vs 2018 levels. Given the heft of rice and other food items and the fact that these commodities were extra pricey back then suggests that we can see food inflation subdued in the near term,” Mr. Mapa said in an e-mail exchange. 

The food-alone index steadied at 1.6% year on year in January from December. However, it slowed from 5.9% in January last year. 

The rebasing to 2018 also brought 2021 inflation average to 3.9%, within the 2-4% central bank target. 

The rebasing ensures that the CPI market basket continues to capture goods and services commonly purchased by households over time. 

The 2018 rebasing is the 12th base period and the 11th rebasing for CPI, the PSA said. 

Security Bank Corp. Chief Economist Robert Dan J. Roces said the month-on-month inflation rate in January was likely borne out of typhoon Odette (international name: Rai) despite the easing year-on-year headline print. 

“That will be an important metric to track moving forward as it shows underlying inflation,” he said in a Viber message. “If the rise in inflation in the months ahead become persistent via month on month, then that should worry the authorities.” 

Inflation in January picked up to 1% on a month-on-month basis from December. 

Typhoon Odette swept through parts of Visayas and Mindanao in mid-December, leaving damage to agriculture and infrastructure worth P13.3 billion and P17.19 billion, respectively. 

National Statistician Claire Dennis S. Mapa said in a press briefing on Friday inflation print for the bottom 30% income households will still have 2012 as the base year as the PSA’s rebasing calculations are ongoing. 

January core inflation print was also not immediately available. 

Inflation as experienced by poor households eased to 3.2% in January versus the 3.3% in December and 4.9% in January 2021. 


The latest inflation outturn is consistent with the central bank’s expectations that inflation will further ease back to its target in the coming months, the Bangko Sentral ng Pilipinas (BSP) said in a statement. 

“Given a manageable inflation outlook, the BSP sees ample scope to keep a patient hand on its various policy levers, while keeping an eye on potential risks to inflation and the financial system,” the central bank said. 

In a separate Viber message, BDO Unibank, Inc. Chief Market Strategist Jonathan L. Ravelas now expects the BSP to maintain its accommodative stance amid the downtrend in inflation. 

However, ING Bank’s Mr. Mapa warned of possible near-term pressure on inflation from tight supply conditions. 

“Supply-side bottlenecks remain unresolved as domestic hog production continues to be hampered by the spread of African Swine Fever while crude oil prices edge higher,” Mr. Mapa said in a note to reporters. 

“Persistent inflation pressure coupled with the likely reversal in financial flows linked to Fed hikes could eventually convince a rather dovish Diokno to finally consider a policy adjustment by the end of second quarter,” he added. 

Security Bank’s Mr. Roces said there’s still room for the BSP to remain accommodative, “but underlying inflation should be closely monitored.” 

The Monetary Board, the central bank’s policymaking body, is scheduled to meet on Feb. 17.