Philippines: Inflation eases to seven-month low in December
Consumer prices fell sharply in December, decreasing 0.6% over the previous month, following the 0.2% fall registered in November. December’s plunge marked the largest month-on-month fall in prices in over ten years. The decline was primarily driven by a steep drop in transport prices—due to spiraling global crude oil prices—and lower prices for food and non-alcoholic beverages. On the other hand, prices rose in four categories, with clothing and footwear recording the strongest price gains, whereas prices were stable in the remaining categories.
Inflation decelerated significantly in December to 5.1% from 6.0% in November. Notably, transport inflation more than halved in the month, while food inflation also eased considerably. Nevertheless, inflation remained well above the upper bound of the Central Bank’s target range for the 2018–2020 period, set at 3.0% plus or minus 1.0 percentage point. Annual average inflation meanwhile edged up to 5.2% in December from 5.0% in November.
December’s drop reaffirms inflation peaked in October and will likely continue to cool moving forward. A downward trend in inflation combined with the Fed’s more dovish tone in recent comments could give reason for the BSP to pull the brakes on its tightening cycle and could even cause the Bank to turn accommodative sooner than previously expected.