December Inflation Highest In 2 years But Still Within Government’s Target
The Philippines Statistics Authority (PSA) reported yesterday, January 6, 2021, that the prices of basic goods and services increased for three straight months as of December. This is recorded as a near two-year high, which is at 3.5 percent. Food and transportation costs are the main drivers of this round of inflation.
According to PSA’s report, the rate of increase in the prices of goods and services typically purchased by consumers – quickened further from 3.3 percent in November, the fastest since it clocked at 3.8 percent in February 2019. Due to this, the average inflation in 2020 is 2.6%, still falling within the government’s 2.4 to four percent for the year.
It was explained that the inflation was due to the high food prices in December, this was also fueled by increased demand during the Christmas season, and supply bottlenecks from the lingering effects of the series of strong typhoons that hit the country in November.
Food and non-alcoholic beverages accelerated to 4.8 percent in December from 4.3 percent in November. Meanwhile, faster growth was seen in the prices of vegetables, particularly for tomatoes and onions, and also meat.
The price of pork increase due to the limited supply caused by the continued presence of African swine fever (ASF) in some provinces. On the other hand, vegetable prices spiked due to the spillover effects of typhoons on farm production. After 19 months of deflation, rice prices went up by 0.1 percent in December. Transportation, accelerated to 8.3 percent in December from 7.6 percent in November as fares for tricycles, jeepneys and buses remain high because of pandemic-related limitations.
Prices in restaurants, as well as miscellaneous goods and services, also increased in December by 2.5 percent, versus 2.2 percent in November. The increase was driven by meals, personal hygiene products, and barbershop services.
Areas outside the National Capital Region (AONCR) have a faster uptick in inflation with 7.3 percent in December versus 3.3 percent in November due to price increase in food, restaurants, transportation, and miscellaneous services.
PSA head Dennis Mapa explained that the inflation was due to the demand as well as the supplies created by the typhoons. He cited the steep increase in tricycle fares in Cagayan Valley, an area badly hit by severe flooding due to the typhoon. Inflation in that region went up to 6.6 percent in December compared to its 5.2 percent rate in November.
In contrast to this, NCR had a slower in December which was 3.2 percent compared to the 3.5 percent in November 2020.
Inflation for the country’s poorest households accelerated to 4.3 percent in December from 3.6 percent in November. This brought the 2020 inflation average to 2.9 percent for this income class.