HIGHER housing, energy and transport costs pushed inflation up in December, the Philippine Statistics Authority (PSA) reported on Tuesday, but the full-year rate remained well within target.
Consumer price growth accelerated to 2.9 percent last month from 2.5 percent in November. The 3.9-percent result a year earlier had marked a return to the 2.0- to 3.0-percent goal after 20 months of above-target inflation.
The rate started surging in March 2022 as Russia’s invasion of Ukraine affected supply chains, and hit an over 14-year high of 8.7 percent in January last year.
December inflation — within the Bangko Sentral ng Pilipinas’ (BSP) 2.3- to 3.1-percent estimate, but higher than the 2.6-percent median in a Manila Times poll of economists — brought the 2024 average to 3.2 percent, well below the prior year’s 6.0 percent.
Core inflation, which excludes volatile food and energy items, rose to 2.8 percent last month from 2.5 percent in November, but was markedly lower than the 4.4 percent seen a year earlier.
For 2024, core inflation averaged 3.0 percent.
“The uptrend in the overall inflation in December 2024 was primarily influenced by the faster annual increment in the index of housing, water, electricity, gas and other fuels at 2.9 percent during the month from 1.9 percent in the previous month,” the PSA said in a statement.
“The annual increase of transport at 0.9 percent during the month from an annual decline of 1.2 percent in November 2024 also contributed to the uptrend,” it added.
National Statistician Claire Dennis Mapa said the increases were “seasonal.”
Food inflation remained at 3.5 percent and accounted for 41.9 percent, or 1.2 percentage points, of overall inflation in December 2024.
Rice inflation — blamed for keeping consumer prices elevated last year — hit 0.8 percent in December 2024, the lowest since January 2022.
The BSP said that the latest inflation result was consistent with its assessment that the rate would remain anchored to the target range over the policy horizon.
However, “the balance of risks to the inflation outlook continues to lean to the upside due largely to potential upward adjustments in transport fares and electricity rates,” while lower rice tariffs are the main factor that could bring the rate lower.
“The within-target inflation outlook and well-anchored inflation expectations continue to support the BSP’s shift toward less restrictive monetary policy,” the central bank said.
“Nonetheless, the monetary authority will continue to closely monitor the emerging upside risks to inflation, notably geopolitical factors,” it added.
Easing inflation — the rate remained within target for most of last year except for an above-target 4.4 percent in July — allowed the BSP’s policymaking Monetary Board to jumpstart an easing cycle in August.
It cut key interest rates by 75 basis points in total last year, bringing the BSP’s benchmark rate to 5.75 percent, and is seen cutting by another 75 bps this year — fewer than the 100 bps earlier expected — given inflation risks and uncertainty over the US Federal Reserve’s easing pace.
The central bank has said that inflation will likely stay within target in the near term. However, the risk-adjusted inflation forecast for 2025 was raised to 3.4 percent from 3.3 percent due to potential upward risks. The 2026 forecast remained at 3.7 percent.
Baseline forecasts, which exclude inflation risks, were also increased to 3.3 percent for 2025 from 3.2 percent and 3.5 percent for 2026 from 3.4 percent.
In a separate statement, meanwhile, Socioeconomic Planning Secretary Arsenio Balisacan said the government remained committed to tempering inflation.
“Despite the risks we encountered throughout the year, our combined efforts to temper inflation have largely been successful,” he said.
“We will build upon this momentum as we commit to keep the inflation rate within our target range in 2025,” he added.
The Development Budget Coordination Committee during its Dec. 2, 2024 meeting, kept the official target at 2.0 -4.0 percent up to 2028.
To boost water and food security amid climate risks, Balisacan said the Department of Social Welfare and Development would expand its Local Adaptation to Water Access and Breaking Insufficiency through Nutritious Harvest for the Impoverished projects to 323 cities and towns across 67 provinces by 2025.
Changes to the Agricultural Tariffication Law, meanwhile, are expected to strengthen the rice sector via increased allocations for the Rice Competitiveness Enhancement Fund to P30 billion yearly, from P10 billion, to 2031.
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