Philippines: Inflation comes in at highest level since November 2008 in December
Inflation inched up to 8.1% in December, above Novembers 8.0%. December’s reading was the highest inflation rate since November 2008. Looking at the details of the release, prices for food and non-alcoholic beverages increased at a faster pace in December. Similarly, housing and utilities prices grew at a stronger pace. This more than offset the weaker increases in transport prices.
Additionally, annual average inflation rose to 5.8% in December (November: 5.4%).
Finally, consumer prices rose a seasonally adjusted 0.25% in December over the previous month, below November’s 0.68% rise. December’s result marked the weakest reading in a year.
Looking ahead, higher input costs and imported price pressures—especially on food and fuel—will keep inflation elevated. Softer domestic demand and the delayed effect of the Central Banks tighter monetary policy should bring down the headline rate somewhat in 2023, however.
Analysts at the EIU commented:
“Although there is no evidence in the data of inflation topping out, we believe the peak is close. The 350 basis points of interest rate increases made by the BSP in the second half of 2022 will be felt more keenly in the coming months (including in slower economic growth), while the end of the tropical storm season will prevent further supply disruption. Falling energy prices will reduce the pressure coming from the transport category, while a rising year-on-year base, particularly from the second quarter of 2023, will make it more difficult for high inflation to be sustained.”