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Inflation eases further to 3.9% in December 2023, full-year rate at 6%

The rate of increase in prices for consumer goods and services in the Philippines continued its downtrend for the third straight month in December 2023 amid slower increases in utility and food costs, the Philippine Statistics Authority (PSA) reported on Friday.

At a press briefing, National Statistician and PSA chief Claire Dennis Mapa said the inflation rate went down to 3.9% in the last month of 2023, slower than the 4.1% rate seen in November last year, and much lower than December 2022’s 8.1% rate.

This is the slowest inflation print for 2023 and also the lowest since February 2022 when it clocked in at 3%. 

December's inflation print fell within the Bangko Sentral ng Pilipinas' (BSP) forecast range of 3.6% to 4.4%. 

Last month's rate brought the full-year 2023 figure to stand at 6%, still above the government’s ceiling of 2% to 4%. 

"Ang pangunahing dahilan ng mas mababang antas ng inflation nitong Disyembre 2023 kaysa noong Nobyembre 2023 ay ang mas mabagal na pagtaas ng presyo ng housing, water, electricity, gas and other fuels. Ito ay nagtala ng 1.5% inflation [from 2.5% in November] at 59.6% share sa pagbaba ng pangkalahatang inflation sa bansa," Mapa said.

(The main reason for the slower inflation in December 2023 versus November 2023 was the slower increase in prices of housing, water, electricity, gas, and other fuels. The index recorded a 1.5% inflation [from 2.5% in November] and a 59.6% share to the overall decline in the country's inflation.)

Electricity, food

Contributing largely to the slowdown in the increase of utility prices was electricity, which saw an inflation rate of -7.8% from -3.7% in November 2023.

Inflation for liquefied petroleum gas (LPG) and house rentals also saw declines at 3.6% from 5.6%, and 3.7% from 3.8%, respectively.

The second commodity group that contributed to the overall deceleration of inflation during the period was food and non-alcoholic beverages with a rate of 5.4%, slower than the 5.7% recorded in the preceding month.

This was due to the decrease in the prices of vegetables at -9.2% from -2% in November 2023. Inflation for meat products also slowed down to 0.2% from 0.5%.

Similarly, food inflation—which tracks price movements in a "basket" of foods commonly purchased by households—decelerated to 5.5% from 5.8% also due to the decreases in vegetable and meat prices.

Rice inflation

However, rice inflation continued its acceleration at 19.6% from 15.8% in November 2023. This is the fastest inflation for rice since March 2009 when it clocked in at 22.9%.

Likewise, the transport index saw an increase of 0.4% from -0.8% in the preceding month.

Inflation in Metro Manila followed the national trend as it saw a rate of 3.5%, lower than 4.2% in the prior month amid slower utility costs and food prices.

In the provinces

Meanwhile, inflation in areas outside of Metro Manila declined to 4% from 4.1% month-on-month, also due to the slowdown in utility and food costs.

For the third consecutive month, Region II (Cagayan Valley) registered the lowest inflation rate at 1.6%, while the  Bangsamoro Autonomous Region in Muslim Mindanao was the region with the highest inflation print at 6.2% for two straight months.

While inflation at the national and regional levels saw decelerations, inflation felt by the bottom 30% income households accelerated to 5% in December 2023 from 4.9% in November 2023, still due to higher inflation for food and non-alcoholic beverages at 7.4% from 7.2%.

Also contributing to the uptrend of inflation for the income group was transport with an inflation rate of 1.5% from 0.9% in the preceding month.

As the country's inflation rate settled to its lowest level in 2023 last December, the National Economic and Development Authority (NEDA) assured that the government is continuously monitoring prices and inflation risks, and implementing measures to protect the purchasing power of Filipino households.

"We must remain vigilant in monitoring the prices of our commodities and continue to implement strategies to address short-term and long-term inflation-related challenges," said NEDA Secretary Arsenio Balisacan.

These strategies, Balisacan added, include implementing timely deployment of trade policy tools along with sustained investments in irrigation, flood control, supply chain logistics, and climate change adaptation.

Boost agri, food production

Meanwhile, in Malacañang, President Ferdinand "Bongbong" Marcos Jr. vowed to boost agriculture and food production following the easing of inflation in December 2023. 

Marcos said he is elated over the continued downtrend of the rate of increase in prices for consumer goods and services in the Philippines.

"Patuloy ang pagsusumikap ng pamahalaan para pagandahin ang kalagayan ng ating ekonomiya. Para sa bagong taon, lalo nating palalakasin ang mga programa para sa agrikultura, at tututukan ang mga hakbang upang mapanatiling abot-kaya ang presyo ng pagkain at iba pang pangunahing bilihin," he said. 

(The administration continues its effort to improve the country's economic state. For the new year, we will intensify programs for agriculture, and we will focus on measures that will ensure that the prices of basic goods and commodities would remain affordable.) — KBK/VDV, GMA Integrated News