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Inflation jumps to 2.5% in December, overall 2019 figure within target

Ralf Rivas
Inflation jumps to 2.5% in December, overall 2019 figure within target
(UPDATED) Transportation expenses go up, but low rice prices keep inflation within target in December 2019

MANILA, Philippines (UPDATED) – Transportation expenses pushed up inflation in December 2019 to 2.5%, said the Philippine Statistics Authority on Tuesday, January 7.

The increase was tempered by the continued easing of rice prices.

The latest figure brought the full-year average to a stable 2.5%, well within the government’s target band of 2% to 4%.

Inflation picked up as base effects from 2018’s inflation spike faded. High numbers had been registered in 2018, affecting the calculation of succeeding figures.

The heavily weighted food and non-alcoholic beverages index rose by 1.7%, while transportation costs picked up by 2.2%.

Higher annual increases were noticed in the indices of alcoholic beverages and tobacco at 18.4%; housing, water, electricity, gas, and other fuels, 1.9%; and furnishing, household equipment, and routine maintenance of the house, 3.1%.

Inflation in the National Capital Region (NCR) rose further by 2.8% in December from 1.9% in November, as transportation costs rose.

Inflation in areas outside NCR accelerated by 2.4% in December from 1.2% in November due to increases in prices of food and non-alcoholic beverages.

Inflation is widely expected to inch up in 2020, but likely to remain within target range.

The Bangko Sentral ng Pilipinas (BSP) said volatility in global oil prices and the potential impact of African swine fever are the main upside risks to inflation in 2020. Geopolitical tensions and global trade uncertainty are likely to continue to be the main downside risks to inflation.

Stable inflation is seen to be an opportunity for the BSP to further reduce interest rates. – Rappler.com

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Ralf Rivas

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