By Katherine K. Chan
PHILIPPINE INFLATION is possible reduced annually in December as low electricity prices may reduce the cost of food during the holidays.
In its earlier forecast for the month, the Bangko Sentral ng Pilipinas (BSP) said inflation is likely to fall to a range of 1.2%-2% in December, down from the 2.9% clip seen last year.
At 2% or at the higher end of the forecast, inflation is likely to rise from 1.5% in November and would be the fastest clip in 10 months or from the 2.1% clip in February. It would be the first time in ten months that inflation returned to the bank’s 2%-4% target.
At the end of the forecast, inflation likely fell to its slowest pace in five months or from 0.9% in July.
“Increased price pressure may come from higher prices of major food items due to the continuing effects of bad weather and strong holiday demand, as well as higher LPG (liquefied petroleum gas) and fuel prices,” the central bank said in a statement on Monday.
This comes despite the Department of Trade and Industry imposing a 60-day price freeze on basic and essential goods last November, following President Ferdinand R. Marcos, Jr.’s declaration of a state of national emergency.
The Ministry of Agriculture has also implemented a maximum suggested price for pork, onions and carrots from December 1 and is expected to continue until the end of January.
However, the Bank said the drop in electricity, kerosene and diesel prices during the month is likely to reduce the inflationary pressure on food prices.
In December, Manila Electric Co. (Meralco) reduced electricity rates by P0.3557 per kilowatt-hour (kWh) to P13.1145 per kWh from P13.4702 per kWh in November.
This is equivalent to a P71 reduction in monthly electricity bills for households using an average of 200 kWh.
Meanwhile, the pump price adjustment for December increased by P0.80 per liter of gasoline. On the other hand, it decreased by P3.80 per liter of diesel and P4.40 per liter of kerosene.
The Philippine Statistics Authority will release inflation data for December on Jan. 6.
In a different analysis, a study by Metropolitan Bank & Trust Co. (Metrobank) offactors Maria Kaila Balite and Joaquim Pantanosas He said that inflation is likely to drop to 1.4% in December, which will do it for the whole year inflation to average 1.6%.
The bank noted that the increase in food prices such as vegetables, fruits, meat and fish due to increased demand brought inflationary pressure in December.
“Food inflation continues to put upward pressure on inflation this month, as holiday demand provides a boost to prices,” he said. “High prices of oil and electricity also increase the weight.
Meanwhile, the central bank said it will continue to monitor the rate of inflation and the growth of the country’s economy in determining monetary policy.
“The BSP will continue to monitor domestic and international developments affecting the outlook for inflation and growth in line with its data-driven approach to monetary policy,” the central bank said.
In its meeting of Dec. 11, the BSP cut its policy rate by 25 basis points (bps) to a three-year low of 4.5% as it continues to see inflation and growth slow. So far we have delivered a total of 200 bps in cuts from August 2024.
As of November, headline inflation averaged 1.6%, in line with the central bank’s full-year forecast.
In 2026, the central bank sees inflation rising to 3.2%, before falling to 3% in 2027.
Mr. Remolona earlier said the current tapering cycle was nearing its end but left the door open to a final 25-bp cut next year depending on economic data.
The Monetary Board is scheduled to hold six regular policy meetings in 2026, the first of which will be held on Feb. 19.
