Inflation rate accelerated to 2.6 percent in December, the fastest in 24 months, on higher prices of food, beverage and petroleum during the holiday period, the Philippine Statistics Authority said Thursday.
Data from PSA showed the December 2016 figure was faster than the 2.5-percent inflation rate in November and 1.5 percent in December 2015. It was also the fastest increase in consumer price index since it was registered at 2.7 percent in December 2014.
This brought the average inflation rate in 2016 to 1.8 percent, higher than 1.4 percent recorded in 2015, but below the government’s target range of 2 percent to 4 percent.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the inflation print in December was expected and was in line with the assessment that inflation would inch up towards the government’s target.
“We will continue to monitor global and domestic financial market developments, shifts in global demand and supply of commodities, changes in global growth prospects to see how these would impact the domestic inflation dynamics, and whether there will be any need to make adjustments to our policy levers,” Tetangco said.
The National Economic and Development Authority said the uptick in inflation was pushed partly by strong demand in the holiday season and supply constraints in some food items. Food inflation rose to 3.7 percent in December from 3.5 percent in the previous month.
Non-food inflation last month was also pushed by transport cost, following the considerable increase in domestic petrol prices.
“The higher prices in transport commodity reflected the hike in international oil prices caused by oil-producing countries’ decision to cut oil production by almost 1.8 million barrels per day,” said Economic Planning Secretary Ernesto Pernia.
Core inflation, which excludes selected volatile food and energy prices, increased to 2.5 percent in December from 2.4 percent in November. The 2016 full-year core inflation settled at 1.9 percent.
The government expects inflation rate to settle within the target range of 2 percent to 4 percent in 2017 and 2018. “The inflation outlook is supported by the country’s brisk domestic demand conditions, buoyed by solid private household spending, higher government expenditure, and adequate domestic liquidity,” said Pernia.
Australia and New Zealand Banking Group Ltd. said in a report the rise in December inflation was in line with market expectations.
“In 2017, we expect average inflation to rise to 3.1 percent [from 1.8 percent in 2016] due to strong domestic demand further supported by the fiscal push on infrastructure. Thus, we still expect the central bank to tighten its policy rate by 50 bps this year, with the first hike in the third quarter,” the bank said.
University of Asia & the Pacific and First Metro Investment Corp. said in a joint report inflation rate was expected to rise moderately this year to a range of 2.8 percent to 3.2 percent along with the rebound of oil prices, strong domestic demand and weaker peso.