Inflation cools down to 5.1% in December 2018

Ralf Rivas
(UPDATED) Inflation eases in December amid a sharp drop in global oil prices, higher domestic rice supply, and a slight recovery of the peso

COOLING DOWN. Inflation eases further in December 2018, a month when prices of goods are usually high. File photo by Darren Langit/Rappler

MANILA, Philippines (UPDATED) – The Philippines’ inflation crisis showed signs of easing, as the rate slowed down to 5.1% in December 2018, the Philippine Statistics Authority (PSA) announced on Friday, January 4.

December is usually the month when inflation kicks higher as people have more cash to burn and consume more than the usual. However, inflation for the month was 0.9 percentage points lower than November’s 6%.

The cooling of what was dubbed 2018’s top economic story came as prices of petroleum in the global market significantly dropped.

The rice supply for the month was also abundant due to harvest season and the Philippine peso slightly strengthened.

The figure brought the average inflation for 2018 to 5.2%, from 2.9% in 2017. But it is still beyond the government’s target range of 2% to 4%.

The slowdown was mainly driven by the slower annual increments in food and non-alcoholic beverages at 6.7% and transport at 4%.

Lower annual increases in alcoholic beverages and tobacco (21.7%); housing, water, electricity, gas, and other fuels (4.1%); furnishing, household equipment, and routine maintenance of the house (3.8%); as well as restaurant and miscellaneous goods and services (4.3%) were also recorded in December.

December’s figure is lower than the projected range of the Bangko Sentral ng Pilipinas of 5.2% to 6%.

Regional inflation

Inflation in the National Capital Region (NCR) was lower than the national average at 4.8% in December. This is also lower than the 5.6% recorded in November.

But the annual average inflation in NCR picked up by 5.5% in 2018 from 3.7% in 2017.

All the regions outside NCR recorded slower inflation in December compared with their November rates.

Among the regions, the lowest annual markup of 3.4% was observed in the Cordillera Administrative Region.

Inflation remained elevated in the Autonomous Region in Muslim Mindanao at 7.5%.

The annual average inflation in areas outside NCR rose to 5.1% in 2018 from 2.7% in 2017.

The government’s economic team expects inflation to fall within the target range in 2019. –

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.