Higher oil and food prices, lower power rates, subdued rice prices, and a strong peso could have slowed the country’s headline inflation to 2.9 percent or picked up to 3.7 percent this month from 3.3 percent in November, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.
“Higher prices of domestic petroleum products and key agricultural items contributed to upward price pressures during the month,” BSP Governor Benjamin Diokno told reporters on Viber, ahead of the release of official December inflation figures in early January.
Local oil companies hiked gasoline, diesel and kerosene prices by 75, 85 and 80 centavos per liter, respectively, on December 22, which Diokno said “could be partly offset by the downward adjustment in electricity rates in Meralco (Manila Electric Co.)-serviced areas, along with slightly lower rice prices and the continued appreciation of the peso.”
The power distributor reduced its per kilowatt-hour (kWh) rate for households consuming 200 kWh monthly by P0.0352 this month.
Latest Philippine Statistics Authority data showed that rice prices declined in the first week of December. The average retail price of regular milled rice slid to P36.29 a kilogram that week from P36.43 a kilogram seven days earlier.
The local currency currently trades within the P48:$1 area, compared to the closing rate of P50.64 at end-December 2019.
“Looking ahead, the BSP will continue to monitor economic and financial developments to ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” Diokno said.
His remarks came after the central bank raised on December 17 its inflation forecast from 2.4 percent to 2.6 percent for 2020 and from 2.7 percent to 3.2 percent for 2021. The 2022 outlook remained at 2.9 percent.
“The balance of risks to the inflation outlook also leans toward the downside from 2020 to 2022, owing largely to potential disruptions to domestic and global economic activity amid the ongoing pandemic,” Diokno said then.