HEADLINE INFLATION likely settled within the 7.8% to 8.6% range in December due to higher electricity rates and rising food prices, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.
“Upward price pressures for the month are expected to emanate from higher electricity rates, uptick in the prices of agricultural commodities, elevated meat and fish products, and higher LPG (liquefied petroleum gas) prices,” the BSP said in a statement.
The BSP’s month-ahead forecast range indicates that inflation may have been faster than the 14-year high of 8% in November.
The upper end of the forecast or the 8.6% would also be the fastest pace since the 9.1% print during the Global Financial Crisis in November 2008.
If the 8.6% forecast is realized, this would bring the full-year average inflation to 5.9% or slightly above the BSP’s 5.8% average forecast for 2022.
December would be the ninth straight month that inflation surpassed the BSP’s 2-4% target range.
BSP Governor Felipe M. Medalla earlier this month said inflation may peak in December, before tapering off in January.
Electricity rates and LPG prices rose in December, adding to upward inflationary pressures.
Manila Electric Co. (Meralco) raised the overall rate for a typical household by P0.3297 to P10.2769 per kilowatt-hour in December.
The price of LPG products also went up by P2.25 per kilogram and AutoLPG by P1.26 per liter in December, marking the second straight month of price hikes.
Vegetable, meat and fish prices continued to go up due to rising input costs and agricultural damage caused by recent weather disturbances.
Supply shortages have driven up the price of red onions to as much as P600 per kilo this month, prompting the Agriculture department to implement a suggested retail price of P250 per kilo of red onions.
“Meanwhile, the reduction in petroleum and rice prices as well as the peso appreciation could contribute to easing price pressures for the month,” the BSP said.
In December, pump price adjustments stood at a net decrease of P2 a liter for gasoline, P2.6 per liter for diesel, and P3.9 a liter for kerosene.
As of Dec. 28, local well-milled rice ranged from P38 to P44 per kilogram.
The peso also continued to appreciate against the US dollar. The peso closed at P55.755 against the dollar on Thursday, strengthening by 0.8% or P0.465 from its close of P56.22 on Dec. 1.
“The BSP continues to monitor closely emerging price developments to enable timely intervention that could help prevent the further broadening of price pressures, in accordance with the BSP’s price stability mandate,” the central bank said.
Mr. Medalla earlier signaled further tightening as it aims to bring down inflation to 3% in the third quarter next year, and back to the 2-4% range by 2024.
He said the central bank may deliver rate hikes in its first two meetings in 2023.
The Philippine Statistics Authority has yet to announce the release date of December inflation data. — Luisa Maria Jacinta C. Jocson