MANILA (UPDATE) - Inflation eased in December to its lowest level in 2021 due to the slower price movements of some basic food items, the state statistics bureau said Wednesday.

Inflation was at 3.6 percent last month, slower compared to the 4.2 percent in November, the Philippine Statistics Authority said. This was within the government target of 2 to 4 percent, and the Bangko Sentral ng Pilipinas' projection of 3.5 to 4.3 percent.

Average inflation for the year was at 4.5 percent, National Statistician Dennis Mapa said.

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Prices of vegetables, fish and rice rose at a slower pace in December, the PSA said, while the rise in transport costs also slowed as fuel costs went down.

Though food and transport prices generally eased, they remained major contributory factors in the inflation rate last month. Pork prices were high in 2021 and especially in December, likely due to the demand during the holidays, Mapa said.

"Yung presyo ng meat, particular ang pork, ito ay talagang mataas. Although nag dedecelerate na siya nitong previous months, but for the whole year, ito'y isa sa malaking contributor. "

(The price of meat, especially pork, is really high. Although it has decelerated in previous months, but for the whole year, it was a major contributor [to inflation].)

Inflation in the National Capital Region eased to 2.8 percent. The highest inflation rates outside the NCR were reported in the Zamboanga and Davao regions, which both registered a 6.1 percent inflation rate.

Mapa added that Typhoon Odette has little impact on the overall inflation.

"Hindi naman nagkaroon ng malaking epekto yung bagyo. Of course we will be checking the provincial data, pero sa nakikita namin for areas outside the National Capital Region, inflation went down and this is due to the reduction sa presyo ng pagkain."

(The typhoon had no significant effect on prices. Of course we will be checking provincial data, but for outside the National Capital Region, inflation went down and this is due to the reduction of food prices.)

ING Philippines Senior Economist Nicholas Mapa meanwhile said the slower food inflation rate was surprising given the damage brought by typhoon Odette.

“Perhaps the authorities did not include inflation in areas stricken by super typhoon Odette…The print is the first time inflation falls below 4 percent but still not enough to keep the full-year inflation within the BSP’s target band,” Mapa said in an interview with ANC.

Bangko Sentral ng Pilipinas Gov. Benjamin Diokno meanwhile said an uptick in inflation is likely to occur in the near term due to the disruptions of the typhoon.

Estimates will be included once data becomes available, Diokno said.

"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.

"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," he added.

The BSP earlier raised its inflation forecast for 2022 to 3.4 percent from 3.3 percent, within the government target band.

Average inflation is also expected to settle in the mid-range of the target in 2022 and 2023, Diokno said.

The BSP said it would maintain its target inflation rate of 2 to 4 percent until 2024.

- With a report from Jekki Pascual, ABS-CBN News

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