The Bangko Sentral ng Pilipinas said Wednesday inflation rate in December likely settled within a range of 3.5 percent to 4.3 percent, compared to the actual 4.2 percent in November.
“Higher electricity rates along with the uptick in food prices due to weather disturbances are the primary sources of inflationary pressures during the month,” the BSP said.
“These could be offset in part by rollbacks in domestic petroleum prices and the appreciation of the peso,” it said.
The BSP said it would continue to monitor emerging price developments to help achieve its primary mandate of price stability that is conducive to balanced and sustainable economic growth of the economy.
Robert Dan Roces, assistant vice president and chief economist at Security Bank Corp., said inflation likely slowed to 4 percent year-on-year in December from 4.2 percent in November.
“Our forecast range is 3.8 percent to 4.2 percent and the estimated month-on-month change is +0.7 percent,” he said.
Roces said the food basket may have contributed around 1.3 percent to the month’s inflation reading, growing by around 1.2 percent month-on-month on the back of holiday price movements.
Meanwhile, the utilities basket is estimated to have contributed around 1.1 percent to the December inflation, led by higher electricity bills as deferred costs from the Malampaya shutdown are collected.
“Finally, the restaurants and services basket may have gone up with demand-pull on the back of looser curbs, food costs pass-thru and holiday activities,” Roces said.
“For the months ahead, primary upside risks include inflationary pressures from food on the back of agricultural output in the aftermath of Typhoon Odette, as well as global crude and other commodity prices’ upward movement,” he said.
Roces said the downside pressures would come from the threat of the Omicron variant.
“Favorable base effects may help offset upside risks and should give the Bangko Sentral ng Pilipinas some further leeway to remain accommodative for the first half of 2022,” he said.