THE PRICES of agricultural products have been rising at a faster clip in recent months. — PHILIPPINE STAR/MICHAEL VARCAS

By Luz Wendy T. Noble, Reporter

HEADLINE INFLATION likely rose by 2.9% to 3.7% in December on the back of a quicker rise in the price of oil and agricultural products, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Tuesday.

The range is well within the 2-4% target set by the central bank.

“Higher prices of domestic petroleum products and key agricultural items contributed to upward price pressures during the month,” Mr. Diokno said in a Viber message to reporters.

Based on data from the Department of Energy, oil companies during the month cumulatively raised prices of gasoline by P2.65 per liter, while diesel and kerosene prices rose by P2.95 and P3.05 per liter, respectively.

On the other hand, Mr. Diokno said downward pressures that could offset price increases in some commodities include lower electricity rates in areas covered by Manila Electric Company (Meralco), cheaper rice, and the continued strength of the peso against the US dollar.

Meralco said earlier that typical households in Metro Manila can expect to see a P7 reduction in their power bills for December following a cut in overall rates due to lower demand in the Luzon grid. Meanwhile, those consuming higher power rates may see reduction rates worth P11-18 in their December bill.

Meanwhile, the peso hovered around the P48 per dollar level in recent weeks.

The consumer price index rose 3.3% in November, the quickest in 21 months or since the 3.8% reading in February 2019. This brought inflation year-to-date to 2.5%.

“Looking ahead, the BSP will continue to monitor economic and financial developments to ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” Mr. Diokno said.

The Philippine Statistics Authority is set to release the official December inflation data on Jan. 5.

In its Dec. 17 policy-setting meeting, the BSP’s Monetary Board raised its inflation forecast for 2020 to 2.6%, from 2.5% on the back of rising oil and food prices.

The central bank slashed rates by a total of 200 basis points this year, reducing the overnight reverse repurchase, lending, and deposit rates to all time lows of 2%, 2.5%, and 1.5%, respectively. It said the benign inflation environment supported its accommodative stance in a bid to bolster the virus-stricken economy.