Inflation rate eased to a one-year low of 3.6 percent, bringing the full-year average to 4.5 percent or above the government’s target range of 2 percent to 4 percent, data from the Philippine Statistics Authority show Wednesday.
The December inflation was slower than 4.2 percent in November and 3.5 percent a year ago.
“The main source of the downward trend of the December 2021 overall inflation was primarily brought about by the slower annual increase in food and non-alcoholic beverages at 3.1 percent in December 2021, from 3.9 percent in November 2021,” national statistician and civil registrar general Dennis Mapa said in an online briefing.
Food inflation decreased to 3.2 percent in December from 4.1 percent in the previous month. Vegetable inflation softened to -10.0 percent from -1.8 percent, while fish inflation also decelerated to 7.0 percent from 7.9 percent in the same period.
Meat inflation slightly increased to 11.3 percent in December from 10.7 percent in November 2021, as pork inflation rose to 17.9 percent from 17.3 percent.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said inflation would likely ease close to the midpoint of the target range of 2 percent to 4 percent in 2022 and 2023.
“The supply disruptions and agricultural damages from typhoon Odette will likely result in a temporary uptick in the prices of food items and other necessities over the near term,” Diokno said in a statement.
“As with previous episodes of natural disasters, the effective implementation of non-monetary government intervention measures to ensure adequate domestic food supply must be sustained in order to mitigate potential supply side pressures on inflation,” Diokno said.
He said BSP would include the typhoon’s impact into its projections once firm estimates become available. He also said the implementation of reconstruction efforts and rehabilitation programs in areas damaged by the storm will be essential to support economic recovery and prevent job losses.
Economic Planning Secretary Karl Kendrick Chua said with the National Capital Region and the neighboring provinces of Cavite, Rizal and Bulacan now under alert level 3, it is important to ensure affordable food prices and the continued delivery of goods and services.
“To temper inflation in meat, especially pork, the government is working to increase local supply and ensure regular unloading of stocks from cold storages,” Chua said.
Chua said local supply should be augmented by pork imports through increased utilization of the pork minimum access volume plus under lowered tariffs under Executive Orders 133 and 134. As of Dec. 27, only around 46 percent or 60,000 MT out of 130,000 MT of the MAV plus with import certificates was utilized.
“To help ensure stable pork supply throughout this year, NEDA reiterates its recommendation to extend the validity of EO No. 133 to December 2022,” Chua said.
Chua called for the distribution of more imported pork outside the NCR, noting that meat is among the top three drivers of inflation in 14 out of 16 regions outside the NCR in December 2021.
Inflation in NCR moved up at a slower pace of 2.8 percent in December from 2.9 percent in November. The annual average inflation in NCR for the year 2021 was higher at 3.5 percent, from 2.2 percent in 2020.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said there could still be some lagged effects by the typhoon Odette damage that could have led to some temporary increase in prices/inflation in hard hit areas especially in January. He said this could fizzle out once food supply conditions, electricity service, water supply and other utilities started to normalize.
“Some pick-up in global oil prices and weaker peso exchange rate since the latter part of December 2021 [peso now among the weakest since March 2020] could also lead to some pick-up in prices of affected products and in overall inflation, lagged effects of which could be reflected in January 2022,” Ricafort said.
“Lingering concerns on the resurgence of COVID/Omicron variant cases worldwide could slow down global economic recovery/demand, thereby could help ease inflationary pressures, going forward, as an unintended consequence by the Omicron variant , thereby could still justify the continuation of accommodative monetary policy to help support/improve economic recovery prospects from the COVID-19 pandemic/lockdowns since last year,” he said.