By Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) forecasts December inflation of 5.2 percent to six percent.

The BSP Department of Economic Research said it “projects December 2018 inflation to settle within (this) range (since) the sustained slowdown of inflation during the month is seen to be driven mainly by the continued decline in petroleum and rice prices, the rollback in minimum jeepney fare, and the slight appreciation of the peso.”

However, the BSP said factors could be offset in part by higher electricity rates in Meralco-serviced areas.

“Moving forward, the BSP will continue to closely monitor evolving price trends and domestic demand condition to help ensure that the inflation target is achieved,” it added.

The Monetary Board has raised key rates by a cumulative 175 basis points this year to curb high inflation which hit a peak of 6.7 percent in September and October.

However with easing price pressures, the BSP on its last Monetary Board policy meeting decided to leave benchmark overnight rate untouched after five straight rate hikes.

BSP Assistant Governor Francisco G. Dakila Jr. said earlier that given indications of tempered price pressures, the Monetary Board thought it prudent to keep monetary policy steady for now, and to allow previous monetary responses such as raising the rates by 175 basis points to curb high inflation, some time “to work their way through the economy.”

“The Monetary Board emphasizes that it remains vigilant against developments that could affect the outlook for inflation and financial stability (and that) the BSP is prepared to take further policy action as appropriate to safeguard its price stability mandate,” said Dakila.

The BSP also reduced its 2019 and 2020 inflation forecasts, as well as its 2018 inflation estimate which is now 5.2 percent from 5.3 percent earlier, during its November 15 Monetary Board policy meeting.

For next year, inflation rate is projected to average 3.18 percent and 3.04 percent for 2020. These numbers are lower than previous forecast of 3.5 percent and 3.3 percent, respectively, for 2019 and 2020.