MANILA (UPDATE 2) - Inflation in January settled at 3 percent using 2018 as the new base year, the state statistics bureau said Friday.

Inflation for the month slowed compared to December 2021, the PSA said in a virtual briefing. The total is within the government target of 2 to 4 percent.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno in a statement said January's slower inflation number is “positive news."

“It supports the narrative that inflation is on its downward trajectory,” Diokno said.

Every 6 years, the Philippine Statistics Authority updates its price index to reflect current spending trends. The latest shift moved the base year to 2018 from 2012.

Based on the 2018 base year, restaurant and accommodation services are higher while the weight of the health basket dropped to 2.89 percent from 3.89 percent in 2012, National Statistician Dennis Mapa said, adding that the new benchmark did not cover the COVID-19 pandemic.

Inflation slowed to 3.6 percent in December 2021 using the 2012 base year, after hovering above target for the majority of the year. The full year 2021 average inflation settled above-target at 4.5 percent.

But using the new base year, the PSA said inflation averaged just 3.9 percent in 2021 or within the target band.

Economic managers earlier decided to keep the inflation target range at 2 to 4 percent until 2024.

• Inflation eases to 3.6 percent in December, lowest level in 2021

The BSP has kept its benchmark rate at a record low of 2 percent, saying the uptick in inflation was "transitory."

This year, the BSP is expected to unwind monetary stimulus put in place during the COVID-19 pandemic.

• BSP ready to unwind stimulus but waiting for right conditions: Diokno
• Fitch Solutions sees BSP hiking rates by 75 bps in 2022

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