Consumer prices picked up pace in December, with inflation rising to 2.9 percent year-on-year, up from 2.5 percent in November. The Philippine Statistics Authority attributed the increase primarily to higher housing and utility costs, as well as transport fares, which contributed significantly to the upward trend.
The inflation rate, as measured by the consumer price index (CPI), has been on an upward trajectory since reaching a low of 1.9 percent in September 2024. While December’s inflation was slightly higher, it remains relatively low compared to historical figures.
For households in the bottom 30 percent income bracket, inflation moderated to 2.5 percent in December, down from 2.9 percent in November. This easing was largely due to lower food prices, especially rice, which constitutes a significant portion—around one-fifth—of the budgets for the poorest families.
Economic Planning Undersecretary and National Statistician Claire Dennis Mapa, speaking at a press conference on Tuesday, explained that the price increases in food commodities, particularly tomatoes, were largely influenced by the combination of storm-related disruptions and heightened demand during the Christmas season. Additionally, the seasonal migration to the provinces during the holidays drove up shipping costs.
While some seasonal factors may push inflation higher in January, Mapa highlighted the “good news” that rice prices continued to decline. The inflation rate for rice dropped to 0.7 percent in December, a sharp contrast to the 5.4 percent increase in November.
The December inflation print brought the average inflation for 2024 to 3.2 percent, a significant improvement from the 6.0 percent average in 2023. The result is well within the Bangko Sentral ng Pilipinas’ target range of 2-4 percent and represents the lowest inflation rate since 2020, when the pandemic-led economic slowdown kept prices in check.
The BSP said it continues to assess that inflation will remain anchored within target in the coming months, noting that the balance of risks to the inflation outlook remains tilted to the upside, primarily due to potential increases in transport fares and electricity rates.
On the other hand, lower import tariffs on rice provide a key downside risk. Domestic demand is expected to stay firm, though somewhat subdued, with private sector spending bolstered by easing inflation and a stronger labor market. However, external risks, including global economic uncertainty, could dampen market sentiment and economic activity.
Given the favorable inflation outlook and stable inflation expectations, the BSP is maintaining its shift toward a more accommodative monetary policy. However, it will remain vigilant in monitoring potential upward risks, particularly geopolitical developments.
Moving forward, the Monetary Board is committed to a gradual and balanced approach to easing policy, aiming to ensure continued price stability that supports sustainable economic growth and job creation.
