DOF Economic Bulletin on December 2019 Inflation

DOF Economic Bulletin on December 2019 Inflation

 The general price level accelerated by nearly 0.7% month-on-month (MOM) in final month of 2019, mainly on account of fish and vegetables. Boosted by holiday demand, fish prices surged month-on-month (MOM) by 5.0% and vegetables, 3.7%.

 Year-on-year (YOY), consumer prices rose by 2.5%, half the previous year’s 5.2% inflation, but double the rate in the prior month and above the median outlook of 2.1%. The continued easing of rice prices tempered the effects of the surge in fish and vegetable prices, moderating food inflation to 2.1%. In the non-food group, inflation rose 2.4% boosted by seasonal upsurge in health (3.5%), restaurants (3.3%), and household furnishings (3.2%). This was dampened by lower electricity and fuel prices (0.8%).

 For 2019, inflation rate averaged 2.5%, same as the December YOY inflation and well within the monetary authority's target range of 2%-4%.

DOF View

 For inflation to fall within the target range, month-on-month price change should be at most 0.3% per month.

 Productivity programs for agriculture will ease seasonal food price increases in the future. The Department of Agriculture (DA) has set up programs to modernize agriculture, build farm-to-market roads, develop value chains and enhance research and development.

Table 1 Inflation and Contribution to Inflation by Commodity

Inflation Rate (%) Contribution to Inflation (ppts)

Month-on-Month (%)

Monthly Annual Monthly Annual

Commodity Group Dec-18 Nov-19 Dec-19 2017 2018 2019 Dec-18 Nov-19 Dec-19 2017 2018 2019 Oct-19 Nov-19 Dec-19

All items 5.13 1.25 2.52 2.85 5.21 2.50 5.15 1.29 2.51 2.85 5.21 2.51 0.17 0.25 0.66 Food & non-alcoholic beverages 6.69 - 1.75 3.05 6.84 2.11 2.68 - 0.71 1.21 2.72 0.85 0.16 0.16 1.10 Rice 6.00 (8.26) (6.83) 0.96 5.70 (2.94) 0.59 (0.83) (0.68) 0.10 0.57 (0.30) (0.75) (0.77) (0.14) Meat 5.46 3.24 3.24 4.41 6.24 3.46 0.35 0.21 0.21 0.28 0.40 0.22 0.39 0.24 - Fish 9.85 2.50 7.43 7.48 12.05 4.19 0.62 0.16 0.49 0.43 0.73 0.27 (0.07) 1.98 4.96 Vegetables 8.10 0.97 8.23 4.57 10.49 4.14 0.26 0.03 0.27 0.14 0.32 0.13 1.75 (0.70) 3.65 Non-alcoholic beverages 13.16 3.12 2.95 1.01 9.73 5.64 0.36 0.09 0.09 0.03 0.27 0.16 0.24 0.16 0.16 Alcoholic beverages & Tobacco 21.67 17.63 18.42 6.92 19.90 12.79 0.49 0.45 0.48 0.15 0.44 0.32 2.27 1.51 1.40 Alcoholic Beverages 6.31 3.56 3.76 3.52 5.88 3.83 0.05 0.03 0.03 0.03 0.04 0.03 0.28 0.28 0.49 Tobacco 29.32 23.30 24.46 8.73 27.01 16.57 0.44 0.42 0.45 0.12 0.40 0.30 3.06 1.84 1.81 NON-FOOD 3.44 1.50 2.31 2.57 3.52 2.36 1.99 0.85 1.31 1.49 2.04 1.35 0.18 0.26 0.26 Clothing and footwear 2.78 2.62 2.62 2.44 2.32 2.56 0.08 0.08 0.08 0.07 0.07 0.07 0.17 0.17 0.16 Housing, Utilities & Fuels 4.09 1.16 1.88 2.74 3.96 2.42 0.86 0.24 0.39 0.58 0.83 0.50 0.18 0.44 0.44

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Housing Rent 3.20 3.11 3.02 1.56 2.68 3.10 0.41 0.39 0.38 0.20 0.35 0.39 - 0.25 0.08 Electricity, Gas & Other Fuels 6.00 (2.75) (0.58) 5.50 6.99 0.78 0.39 (0.18) (0.04) 0.34 0.45 0.05 0.60 0.99 1.17 Furnishings, household eqt 3.78 2.80 3.05 2.22 3.15 3.15 0.11 0.08 0.09 0.07 0.09 0.09 0.08 0.41 0.33 Health 4.78 3.05 2.87 2.62 3.36 3.46 0.19 0.12 0.11 0.10 0.13 0.13 0.17 0.41 0.08 Transport 3.98 (2.39) 2.20 5.00 6.52 1.14 0.28 (0.18) 0.16 0.35 0.46 0.08 0.19 (0.19) 0.66 Oprtn of Personal Transport 3.75 (3.57) 7.12 11.09 18.37 (0.38) 0.07 (0.07) 0.13 0.19 0.34 (0.01) 0.92 (1.32) 0.62 Transport Services 4.51 (2.64) 0.18 3.44 2.66 1.81 0.20 (0.12) 0.01 0.16 0.12 0.08 (0.18) 0.09 0.90 Communication 0.40 0.30 0.30 0.29 0.37 0.31 0.01 0.01 0.01 0.01 0.01 0.01 - 0.10 - Recreation and Culture 3.15 1.40 1.40 1.17 2.01 2.45 0.04 0.02 0.02 0.02 0.03 0.03 0.09 0.09 0.09 Education (3.75) 4.59 4.59 2.50 (0.83) 0.30 (0.13) 0.15 0.15 0.09 (0.03) 0.00 - 0.08 - Restaurants & Misc. Services 4.35 2.69 2.69 1.71 3.60 3.32 0.53 0.33 0.33 0.21 0.44 0.40 0.08 0.34 0.08

Core 4.73 2.55 3.07 2.48 4.10 3.26

Source of Basic Data: PSA

Table 2 Prices of Selected Commodities

Dec-18 Nov-19 Dec-19

Meralco rate per kWH for 200KW/mo consumption 10.18 9.56 9.86 Meralco Generation Charge per kWH 5.33 5.03 5.20 Meralco Transmission Charge per kWH 0.70 0.64 0.72 Diesel (PHP/litre), NCR 41.62 44.15 44.84 Gasoline, RON 95 (PHP/litre), NCR 52.19 57.48 58.09

Sources of basic data: Meralco, DOE

Table 3 Year-On-Year Price Change by MOM Price Change Scenario (%)

MOM

Year-On-Year

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

0.9 3.3 4.0 5.0 5.6 6.4 7.3 8.0 8.8 9.6 10.4 11.1 11.4

0.8 3.2 3.8 4.7 5.2 5.9 6.6 7.2 7.9 8.6 9.3 9.9 10.0

0.7 3.1 3.6 4.3 4.8 5.4 6.0 6.5 7.1 7.6 8.2 8.7 8.7

0.6 3.0 3.4 4.0 4.4 4.8 5.4 5.8 6.2 6.7 7.1 7.5 7.4

0.5 2.9 3.2 3.7 4.0 4.3 4.8 5.0 5.4 5.7 6.1 6.3 6.2

0.4 2.8 3.0 3.4 3.6 3.8 4.1 4.3 4.5 4.8 5.0 5.2 4.9

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0.3 2.7 2.8 3.1 3.2 3.3 3.5 3.6 3.7 3.8 4.0 4.0 3.7

0.2 2.6 2.6 2.8 2.7 2.8 2.9 2.8 2.9 2.9 2.9 2.9 2.4

0.1 2.5 2.4 2.5 2.3 2.3 2.3 2.1 2.1 2.0 1.9 1.8 1.2

0.0 2.4 2.2 2.2 1.9 1.8 1.7 1.4 1.2 1.1 0.9 0.7 -

(0.1) 2.2 2.0 1.9 1.5 1.2 1.1 0.7 0.4 0.2 (0.1) (0.4) (1.2)

(0.2) 2.1 1.8 1.6 1.1 0.7 0.5 0.0 (0.4) (0.7) (1.1) (1.5) (2.4)

(0.3) 2.0 1.6 1.3 0.7 0.2 (0.1) (0.7) (1.2) (1.6) (2.1) (2.6) (3.5)

(0.4) 1.9 1.4 1.0 0.3 (0.3) (0.7) (1.4) (1.9) (2.5) (3.1) (3.7) (4.7)

(0.5) 1.8 1.2 0.7 (0.1) (0.8) (1.3) (2.1) (2.7) (3.4) (4.0) (4.7) (5.8)