MANILA -- (UPDATE) Inflation in December slowed to its lowest since June 2018, falling below expectations, as food and transportation prices continued to fall.

The consumer price index rose 5.1 in December, from 6 percent in the previous month and 2.9 percent in December 2017. Average inflation for the full year 2018 was at 5.2 percent, the highest since 2009.

Economists polled by Reuters and Bloomberg predicted December inflation at 5.6 percent.

Slowing inflation gives the Bangko Sentral ng Pilipinas (BSP) room to keep interest rates steady for the second straight policy meeting, after raising the benchmark by a total of 1.75 percentage points to 4.75 percent in 2018.

"It seems that the trend is on the way down. For now, we’re just happy that we’re seeing a silver lining that inflation is on the way down and possibility that we don’t expect the central bank to raise rates in 2019," BDO Unibank chief market strategist Jonathan Ravelas told ANC.

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Oil price swings are a "wildcard" in the inflation outlook, Ravelas said. The Philippines' economic fundamentals point to a widening trade deficit as the government's infrastructure program proceeds, he said.

Growth this year will be "very strong," staying at the 6-percent level, he said.

While inflation in December is still outside the BSP's 2 to 4 percent target for 2018 and this year, it marked the second straight month that inflation has slowed and the first time since August that the print was below 6 percent.

The BSP expects inflation to return to its target range this year, with the average seen at 3.18 percent from the expected 5.2 percent average in 2018.