Headline inflation slowed down to 3.0 percent in January 2022 from 3.2 percent in December 2021 using the 2018-based Consumer Price Index (CPI) series. The January 2022 inflation settled at the midpoint of the Government’s inflation target range of 2.0-4.0 percent for the year. Meanwhile, on a month-on-month seasonally adjusted basis, inflation was higher at 0.4 percent in January 2022 from 0.2 percent in December 2021.

The lower headline inflation can be traced to slower price increases of selected non-food items along with easing inflation for alcoholic beverages and tobacco. Inflation for housing, water, electricity, gas, and other fuels slowed down in January as electricity rates declined owing to lower generation charges, while prices of liquefied petroleum gas (LPG) also fell. At the same time, restaurants and accommodation services inflation also moderated during the month. Meanwhile, year-on-year food and non-alcoholic beverages inflation held steady at 1.6 percent in January from the previous month’s rate.

The inflation for 2021 using the 2018-based CPI was notably lower compared to the older series. The annual headline inflation for 2021 using the 2018-based series settled at 3.9 percent, which is lower than the 4.5 percent average using the 2012-based CPI.

Nevertheless, the latest inflation outturn using the 2018-based CPI remains consistent with BSP’s projections that inflation will decelerate further in the coming months and revert to the target range over the policy horizon. Meanwhile, the balance of risks to the inflation outlook appears to be skewed slightly on the upside for 2022 but continues to be broadly balanced for 2023. The Monetary Board will review its assessment of the inflation outlook along with the latest GDP outturn in its monetary policy meeting on 17 February 2022.

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