UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting comment on the release of the CPI results in the Philippines.

Key Quotes

“Headline inflation eased back to the BSP’s 2.0%-4.0% target range at 3.6% y/y in the final month of 2021 (from 4.2% in Nov 2021), marking the lowest reading since Dec 2020. It also came in better than our estimate (4.0%) and Bloomberg consensus (4.1%).”

“We expect inflation to continue its downtrend in 2022 but probably still above the mid-point of the BSP’s 2.0%-4.0% target range for the greater part of the year, due to global supply bottlenecks, volatile commodity prices, currency weakness, adverse weather, petitions for transport fare hikes, and expiry of tariffs on pork imports. We reiterate our 3.5% inflation projection for 2022 (2021: 4.5%).”

“The better-than-expected inflation outturn in Dec 2021 would allow the BSP to continuously hold policy rates unchanged through 1H22 in order to uphold the nation’s fragile economic recovery.”