Gov’t sets 3% inflation target for 2015

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Confident that inflation will remain low in the next 4 years, the latest target is also aligned with the government growth projection until 2016, the central bank says

MANILA, Philippines – The Development Budget Coordination Committee (DBCC) decided to keep the current inflation target at 3%, plus or minus 1 percentage point for 2015 to 2016.

Through its Resolution No. 2015-1 dated January 27, DBCC also kept the inflation target for 2017-2018 at 3%, plus or minus 1 percentage point.

Inflation is the general increase in prices of goods, while inflation target is defined in terms of the average year-on-year change in the consumer price index (CPI) over the calendar year.

In a statement released by the Bangko Sentral ng Pilipinas (BSP), DBCC said the current 3%, plus or minus 1 percentage point fixed annual target for 2015-2016 set by the government is aligned with the country’s economic growth objective of 7%-8% for both years.

In January, BSP reported that 2014’s inflation remained within target in 2014, hitting a full-year average of 4.1% – the 6th consecutive year that it remained within the official target range beginning 2009.

“Inflation has been within target in the last 6 years and is expected to remain so over the medium term,” BSP said.

Declining food inflation owing to ample domestic supply of key food items and decelerating non-food inflation like electricity rates and the prices of domestic petroleum products contributed to the low inflation as 2014 ended.

Similarly, core inflation and all alternative measures of core inflation estimated by the central bank were lower in the last quarter of 2014, relative to the rates registered in the previous quarter.

The number of Consumer Price Index (CPI) components showing inflation rates above the 5% threshold also decreased, accounting for a slightly smaller proportion of the CPI basket, BSP said.

BSP added that structural changes in inflation dynamics and improvements in the economy’s productive capacity support a low inflation environment.

BSP Governor Amando Tetangco Jr previously said the central bank’s efforts to maintain macroeconomic stability made the economy more resilient in the face of challenges essentially coming from the external sector. –

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