PHILIPPINE inflation cooled to a 22-month low in December yet the central bank said monetary settings will remain “sufficiently tight” amid accelerating rice prices.

Consumer prices increased 3.9 per cent last month from a year ago, the statistics agency reported on Friday (Jan 5). While the print eased back to within the Bangko Sentral ng Pilipinas’ (BSP) 2 to 4 per cent goal for the first time since March 2022, the 2023 average of 6 per cent missed the inflation target for a third straight year.

Rice inflation quickened for a second straight month to 19.6 per cent from a year ago, the fastest pace since March 2009, according to the statistics agency. The government may further cut the tariff on rice imports to help cool prices, National Economic and Development Authority head Arsenio Balisacan said after the data.

“Looking ahead, the Monetary Board deems it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident,” the BSP said on Friday, reiterating that it will take “appropriate action as needed to bring inflation back to the target”.

“The balance of risks to the inflation outlook continues to lean significantly towards the upside,” the central bank said, citing potential pressures from higher transport and power rates, oil and food prices.

Volatile costs of the staple grain along with other persistent price risks have kept BSP governor Eli Remolona hawkish, repeatedly signalling that the key rate will remain at a 16-year high of 6.5 per cent “for a while”. Last month, Remolona said he wants to see inflation comfortably within target before considering reversing some of the 450 basis points of hikes since May 2022.

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