The Philippine Statistics Authority reported that inflation in the Philippines slowed to 3.9 percent in December. This decrease in inflation was primarily due to lower year-on-year growth in the index of housing, water, electricity, gas, and other fuels. December’s figure, down from the previous month’s 4.1 percent, was also significantly lower than last year’s 8.1 percent.
The Bangko Sentral ng Pilipinas (BSP) had estimated inflation to be within the range of 3.6 to 4.4 percent for the month, and the actual figure fell within this range. In a Manila Times poll of economists, the median estimate for inflation was 4.0 percent, which was also lower than the reported figure.
The central bank had set a target range of 2.0 to 4.0 percent for inflation for the year, and December’s figure fell within this target. This is a positive sign for the Philippine economy, as it indicates that inflation is under control.
The decrease in overall inflation in December was primarily driven by the lower year-on-year growth in the index of housing, water, electricity, gas, and other fuels. This sector saw a growth rate of 1.5 percent in December 2023, down from 2.5 percent in the previous month. This decrease in growth contributed to the overall slowdown in inflation.
Food and alcoholic beverages accounted for a little over half of the overall inflation, with a 53.0 percent share or 2.1 percentage points. Food inflation fell to 5.5 percent in December, down from 5.8 percent in November. The Philippine Statistics Authority attributed this decrease to a sharp deceleration in price growth for vegetables, tubers, plantains, cooking bananas, and pulses, which saw a growth rate of 9.2 percent.
Core inflation, which excludes volatile food and energy items, also decelerated in December. It fell to 4.4 percent from the 4.7 percent seen in the previous month and 6.9 percent a year earlier. This indicates that the overall inflationary pressures in the economy are easing.
However, despite the decrease in December, the year-to-date overall inflation rate reached 6.0 percent, which is still above the BSP’s target range of 2.0 to 4.0 percent. Core inflation, on the other hand, averaged 6.6 percent for the year. This suggests that there are still underlying inflationary pressures in the economy that need to be addressed.
Overall, the slowdown in inflation in the Philippines in December is a positive development for the economy. It reflects decreased growth in housing and food prices, which are significant components of the inflation basket. However, the year-to-date inflation rate is still above the central bank’s target range, indicating that there is room for further improvement. The BSP will need to continue monitoring inflationary pressures and implement appropriate measures to ensure price stability and sustainable economic growth.
Source: The Manila Times
