Higher food prices push inflation up 3.5% in December 2020

Prices of goods inched up in December 2020, as Filipinos went shopping and celebrated the holidays despite the coronavirus-triggered recession.

The Philippine Statistics Authority on Tuesday, January 5, said inflation rose to 3.5% in December, which is higher than the 3.3% posted in November.

National Statistician Dennis Mapa said higher prices of vegetables, meat, and rice placed upward price pressures during the month.

Transportation costs, as well as prices of alcoholic drinks and health services, also went up during the period.

Inflation in the National Capital Region (NCR) slowed down to 3.2% in December from the 3.5% in November, while inflation in areas outside NCR increased to 3.7% from 3.3%.

Historically, prices of goods tend to rise due to the festivities during Christmas and New Year.

Mapa also noted that the effects of tropical cyclones in November spilled over to December and caused the uptick in prices outside Metro Manila.

To mitigate the impact of disasters on agricultural goods, Acting Socioeconomic Planning Secretary Karl Chua called for "additional cold storage facilities, warehouses, and post-harvest centers."

"The imminent threat of natural calamities every year highlights the need for long-term solutions such as infrastructure investments that would improve flood control, water management and irrigation systems, reforestation, climate-resilient production and processing facilities, among others," Chua said in a statement.

The December inflation rate brought the full-year figure to 2.6%, within the government's target range of 2% to 4%.

For 2021, the government's economic managers estimated that inflation would also settle between 2% and 4%.

"The overall balance of risks to future inflation continues to lean toward the downside owing mainly to the continued uncertainty caused by the pandemic on domestic and global economic activity," said the Bangko Sentral ng Pilipinas in a separate statement.

"Nonetheless, upside risks emanate from the possibility of an early rollout of COVID-19 vaccines in the Philippines, which is expected to ease the existing lockdown measures and expand further operating capacity of the economy." – Rappler.com

Ralf Rivas

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

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