MANILA - Philippine inflation quickened in December to 3.5 percent driven by higher food prices and transport costs, the state statistics bureau said on Tuesday.

This was the highest inflation rate since February 2019’s 3.8 percent. It was also the fastest since the 3.5 percent registered in March 2019, the Philippine Statistics Authority (PSA) said.

Last month’s inflation brought the average inflation for 2020 to 2.6 percent, the PSA said.

“Ang pangunahing dahilan ng pag-angat ng inflation sa buwan ng Disyembre 2020 ay ang mas mabilis na pagtaas ng presyo ng food and non-alcoholic beverages,” said National Statistician Dennis Mapa.

(The main driver of faster inflation in the month of December 2020 was the faster rise in the prices of food and non-alcoholic beverages.)

Mapa said prices of vegetables like onions and tomatoes rose 19.7 percent and 14.6 percent respectively from November to December. The price of pork also rose 10 percent month on month, he said.

Rice prices also climbed for the first time since the implementation of the Rice Tarrification Law

Transport costs also contributed to faster inflation, Mapa said, with tricycle fares rising 47.2 percent in December, and jeepney fares rising 6.6 percent.

December’s inflation rate was within the 2.9 to 3.7 percent range forecast by the Bangko Sentral ng Pilipinas.

It was also within the 2 to 4 percent target range of government.

The ABS-CBN Data Analytics Group meanwhile noted that Philippine inflation in December was the fastest among major ASEAN economies.

Inflation was also fastest in Cagayan Valley and Bicol region, which were both hit hard by typhoons and flooding.

“Definite this is caused by the typhoons and flooding in the region,” Mapa said.

The BSP earlier said that benign inflation has allowed it to reduce interest rates as it attempts to stimulate the economy amid the disruptions caused by the COVID-19 pandemic.

Meanwhile, the central bank said decreased economic activity due to the pandemic meant that inflation would likely to ease in the coming months.

“The overall balance of risks to future inflation continues to lean toward the downside owing mainly to the continued uncertainty caused by the pandemic on domestic and global economic activity,” BSP Governor Benjamin Diokno said in a statement following the release of the December figures.

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Diokno however added that there were “upside risks” on inflation as vaccines are rolled out which would allow the domestic and global economies to further open up.

“At the same time, a stronger than expected world economic recovery as the vaccine is increasingly deployed in key economies abroad could present upward price pressures on global oil and food prices.

The Philippines has ramped up borrowing from multilateral lenders to finance its vaccine program.

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