Inflation seen at 1.2% to 2.0% in December amid holiday demand

The country's inflation may either ease further to as low as 1.2% or accelerate to as high as 2.0% in December, driven by adverse weather conditions and seasonal holiday demand, the Bangko Sentral ng Pilipinas (BSP) said Monday.

The central bank said inflation could pick up from November’s 1.5% print due to higher prices of major food items following inclement weather, coupled with strong holiday demand.

Higher prices of fuel products and liquefied petroleum gas (LPG) may also add to upward price pressures.

The country was hit by powerful typhoons in November, including Typhoon Tino (international name: Kalmaegi) and Typhoon Uwan (international name: Fung-wong), which disrupted agricultural output and supply chains.

Fuel retailers also announced another round of pump price hikes on Monday, with diesel and kerosene prices increasing by P0.60 per liter each, while gasoline prices were kept unchanged.

This brings year-to-date net adjustments to an increase of P20.50 per liter for gasoline, P20.85 per liter for diesel, and P5.55 per liter for kerosene.

“These pressures could be partly offset by lower electricity prices in Meralco service areas and declining kerosene and diesel prices,” the BSP said.

The Manila Electric Company earlier announced a reduction of 35.57 centavos per kilowatt-hour for the December billing period, translating to a decrease of more than P71 in the monthly bill of a typical household consuming 200 kilowatt-hours.

In its latest meeting on December 11, the BSP’s Monetary Board said it expects inflation to average 1.6% this year, slightly lower than the earlier projection of 1.7%.

Inflation is then seen to accelerate to 3.2% next year before easing to 3.0% in 2027.

“The BSP will continue to monitor domestic and international developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy,” the central bank said.—MCG, GMA Integrated News