January inflation 'flat' at 2.9%

The Philippine Statistics Authority (PSA) [link] released January consumer price index data that revealed inflation caused prices to increase 2.9% y/y, but that this increase was “flat” relative to December’s similar 2.9% y/y increase. The BSP said that the results were “consistent with the BSP’s assessment that inflation will remain anchored to the target range over the policy horizon”, but noted that risks remain to the upside due to “uncertainty in the external environment [that] could temper economic activity and market sentiment.” 

MB bottom-line: I know that longtime readers are probably tired of hearing me talk about inflation, but my daily conversations with regular people (not those like me who are obsessed with the market and the world of finance) consistently tell me that (on average) people do not understand inflation. Some think that prices will come back down (they won’t). Some think that “flat” inflation means that prices didn’t go up (they did). Some think that inflation within the target range is good for them (it is, in that prices aren’t flying up, but it isn’t in that the target range is configured to erode the buying power of cash and prioritize the interests of asset holders). The CPI number for January was 128.4, which was actually up 0.54% from December. As has been the case almost the entire time, the price of most basic things (food, electricity) are leading the way. The people I talk to are feeling this. The people I talk to are taking out informal loans to buy food. The Filipino consumer is being tested in a major way. The bread is more expensive, but at least the digital circus is nice.

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