Inflation picks up to 2.5% in December 2019

Inflation accelerated further to 2.5% in December 2019, bringing the full-year 2019 inflation print to 2.5%, within the government's full-year target range of 2-4%, the Philippine Statistics Authority (PSA) revealed Tuesday.

The latest figure is higher than the 1.3% recorded in November in the same year, and lower than the 5.1% in December 2018.

Deputy National Statistician Rosalinda Bautista attributed the uptick to the annual increment recorded in the heavily-weighted food and non-alcoholic beverages index.

"The main source of the upward trend in December 2019 inflation was the annual increase in the index of transport. The annual increment in food and non-alcoholic beverages also pushed up the overall inflation in December 2019," Bautista told reporters in a press conference in Quezon City.

The food and non-alcoholic index recorded an inflation print of 1.7% in December while the transport index picked up 2.2% in the same month versus the 2.4% in November 2019.

For the National Capital Region (NCR) alone, inflation rose further by 2.8% in December from the 1.5% recorded in November 2019.

Outside NCR, inflation was fastest in the Bicol Region with 3.3%, and slowest in the Bangsamoro Autonomous Region in Muslim Mindanao with 0.8%.

The latest figure brought the full-year 2019 inflation print to 2.5%, within the government's target range of 2.0% to 4.0%.

Risks tilted to the upside

Moving forward, Bautista said that among the drivers of inflation expected in January are upticks in prices of food, which is heavily weighted among the inflation indices.

"Puwedeng mag-cause ng increases is still the heavily-weighted food, so kung magkakaroon ng increase ng prices, particularly 'yung rice na malaki 'yung weight niya, tsaka 'yung meat and fish, then magti-trigger siya ng increase," she said.

Bautista also noted that while the third tranche of excise taxes on petroleum products will be introduced this year, this is likely to have minimal impact on inflation.

"Kasi 'yung increase ng diesel, we have monitored in 2020, we are expecting an increase to P6 from P4.50, LPG to P3 per kilogram and unleaded will be P10 per liter. Maliit lang 'yung magiging impact," she explained.

Bautista was mirrored by the Bangko Sentral ng Pilipinas (BSP), which said that the risks to inflation are tilted to the upside for 2020, but tilted to the downside in 2021.

"The volatility in global oil prices and the potential impact of the African Swine Fever outbreak are the main upside risks to inflation," the central bank said in a separate statement.

Agriculture Secretary William Dar in December already said that the ASF outbreak is already tapering down, given the continued decline in the number of incidents being reported.

"Meanwhile, the impact of global trade and policy uncertainty as well as geopolitical tensions continue to be the main downside risks to inflation," said the BSP.

Malacañang on Tuesday said the uptick in the inflation rate last December should not be a cause for concern.

“The uptick in inflation rate in December 2019 to 2.5% from November 2019's 1.3% should not be a cause for alarm. It remains well within our target range of 2% to 4%,” presidential spokesperson Salvador Panelo said.

“Our economic managers continue to keep a tight watch over inflation, amid emerging global threats,” Panelo said. — KG/RSJ, GMA News