Inflation accelerated to 3.5% in December 2020 — PSA

Inflation or the rate of increase in the prices of goods and services recorded its third straight month of acceleration and quickened to its fastest level in more than a year due to the faster increase in the prices of food commodities during the period.

It clocked in at 3.5% in December from 3.3% in November last year.

This is also faster than the 2.5% inflation rate recorded in December 2019.

“Ito ang pinakamataas na inflation na naitala sa bansa mula noong March 2019,” National Statistician Claire Dennis Mapa said at a virtual press conference on Tuesday.

The December inflation brought the full-year 2020 figure to 2.6%, settling within the government’s target of 2% to 4%.

“Ang pangunahing dahilan ng pag-angat ng inflation sa buwan ng Disyembre 2020 ay ang mas mabilis na pagtaas ng presyo ng food and non-alcoholic beverages,” Mapa said.

The food and non-alcoholic beverages index increased to 4.8% from 4.3% in November 2020.

The commodity group has a 54% share in the overall December inflation.

“Partikular dito ang pagtaas ng presyo ng gulay, gaya ng sibuyas at kamatis, na may bilis na 19.7%, mula sa 14.6% inflation noong Nobyembre 2020,” the Philippine Statistics Authority (PSA) chief said.

“Nakadagdag din ang pagtaas na presyo ng karne, gaya ng baboy, na may bilis na 10.0%, mula sa 8.2% inflation noong Nobyembre 2020,” Mapa added.

Also contributing to the faster food and non-alcoholic beverage price index is rice which posted a 01% inflation from a -0.1% in November last year.

“Ang pangalawang commodity group na may pinakamalaking ambag sa pangkalahatang inflation ay ang transport na may 8.3% inflation at 19.6% share sa pangkalahatang inflation,” Mapa said.

“Ang mga nag-ambag ng malaki sa inflation ng transport ay ang pamasahe sa tricycle, 47.2% inflation; pamasahe sa jeep, 6.6% inflation; at pamasahe sa bus, 4.4% inflation,” he added.

Meanwhile, restaurant and miscellaneous goods and services is third largest contributor in the overall December 2020 inflation as it recorded a rate of 2.5%.

“Ang pangunahing dahilan sa pagtaas ng commodity group na ito ay ang meals na may inflation na 2.4%,” the PSA chief said.

Under restaurant and miscellaneous goods and services, articles for personal hygiene, such as rubbing alcohol and toothpaste, recorded an inflation of 2.9% while barbershop services posted 7.6% inflation.

Annual increment was also recorded in health index at 2.6% from 2.4% in November 2020.

Within BSP forecast

In a separate statement, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the 3.5% December inflation was within the central bank’s  forecast range of 2.9% to 3.7%.

“The BSP continues to expect inflation to settle within the target range over the policy horizon,” the BSP chief said.

“The recent uptrend in inflation is seen to be largely transitory reflecting the short term impact of weather disturbances,” he added.

Nonetheless, he said the BSP stands ready to deploy its full arsenal of monetary instruments as needed.

On the other hand, inflation slowed down in the indices of the following commodity groups:

• Alcoholic beverages and tobacco, 12.2%
• Housing, water, electricity, gas, and other fuels, 0.55
• Furnishing, household equipment and routine maintenance of the house, 3.3%
• Communication, 0.2%

The rest of the commodity groups such as clothing and footwear, education, and recreation and culture retained their previous month’s annual rates.

NCR inflation

Compared to the national average, inflation in the National Capital Region (NCR) slowed to 3.2% in December 2020 from 3.5% in November 2020.

In December 2019, inflation in the area was posted at 2.8%.

The PSA noted that annual rates decreased further in the indices of housing, water, electricity, gas and other fuels at -0.6%; and recreation and culture at -0.3% in the capital region.

Other commodity groups exhibited slower annual growth rates, except for alcoholic beverages which recorded a higher annual gain of 9.3%; and transport and education which retained their previous month’s annual rates of 10.9% and 0.5%, respectively.

The annual average inflation in NCR eased to 2.2% in 2020, from 2.6% in 2019.

Areas outside NCR

Inflation in areas outside NCR (AONCR) followed the national trend as it quickened to 3.7% in December last year from 3.3% in November 2020.

The uptrend in the inflation in AONCR was mainly due to the higher annual rate of increment in the index of the heavily-weighted food and non-alcoholic beverages at 4.5% during the month.

Faster annual rates were  also  recorded  in  the indices  of health at 2.6%; transport at 7.5%; and restaurant and miscellaneous goods and services at 3.1%.

On the other hand, slower annual gains were posted in the indices of alcoholic beverages and tobacco at 12.7%; housing, water, electricity, gas, and other fuels at 0.9%; and furnishing, household equipment and routine maintenance of the house at 2.7%.

The rest of the commodity groups such as clothing and footwear; communication; recreation and culture; and education retained their previous month’s annual rates, according to the PSA.

Compared with their annual growth rates in November 2020, 11 regions in AONCR had higher inflation in December 2020. 

The highest inflation during the month was noted in Region II (Cagayan Valley), and  Region V (Bicol Region), both at 6.6%, while the lowest remained in Region VII (Central Visayas) at 0.9%.

The annual average inflation in AONCR went up to 2.7% in 2020, from 2.5% in 2019.

Inflation for bottom 30%

Meanwhile, inflation felt by the bottom 30% income households accelerated to 4.3% in December 2020 from 3.6% in November 2020.

This, as an annual increment in the index of the heavily-weighted food and non-alcoholic beverages at 3.6% primarily pushed up the overall inflation during the month.

Moreover, the indices of the following commodity groups also exhibited faster annual increases in December 202 for the bottom 30% income households:

• Alcoholic beverages and tobacco, 13.7%
• Clothing and footwear, 2.4%
• Furnishing, household equipment and routine maintenance of the house, 1.6%
• Health, 2.8%
• Transport, 18.1%
• Restaurant and miscellaneous goods and services, 3.2%

Likewise, the annual rate of recreation and culture index inched up by 0.1% during the month, from an annual drop of -0.1% in the previous month.

“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,” Diokno said.

“Nevertheless upside risks emanate from the possibility of an early roll out of COVID-19 vaccines in the Philippines, which is expected to ease the existing lockdown measures and expand further operating capacity of the economy,” he said.

“At the same time, a stronger than expected world economic recovery as the vaccine is increasingly deployed in key economies abroad could present upward price pressures on global oil and food prices,” he added. — RSJ, GMA News