MANILA, Philippines — Headline inflation for December 2024 is projected to reach 2.6 percent, remaining within the government’s target range of 2 to 4 percent, largely due to declining rice prices, according to an economist.
“Inflation is likely to remain manageable and well-aligned with the Bangko Sentral ng Pilipinas’ (BSP) target, thanks to lower rice prices, which make up 9 percent of the consumer price index (CPI) basket,” said Michael Ricafort, chief economist of Rizal Commercial Banking Corp., in a message to the Philippine News Agency on Wednesday.
In November, headline inflation was recorded at 2.5 percent.
Measures to Curb Inflation
Rice, a major factor in inflation since September 2023, has seen its prices ease following government intervention. President Ferdinand R. Marcos Jr. addressed the issue by signing Executive Order (EO) 62, series of 2024, which introduced the Comprehensive Tariff Program 2024-2028 in June.
Implemented in July, the EO reduced tariffs on imported rice from 35 percent to 15 percent. This policy shift has moderated retail rice prices significantly, with rice inflation dropping to 5.1 percent in November, compared to a high of 22.5 percent in June.
Global Commodity Trends
Ricafort also highlighted declining crude oil prices as another factor contributing to subdued inflation. “Global crude oil prices have reached their lowest levels in over two months, along with other key commodities, which are at their lowest in three to four years,” he explained.
This decline, driven by weaker economic data from China—one of the world’s largest importers of oil and commodities—has helped stabilize inflation rates worldwide. Ricafort added that this environment could justify future interest rate cuts by the U.S. Federal Reserve, which might influence similar actions locally.
Holiday Spending Effects
Despite these positive trends, Ricafort cautioned that seasonal holiday spending could cause a temporary rise in prices. However, the overall inflation rate is expected to remain within acceptable limits.
The Philippine Statistics Authority is scheduled to release the official inflation data for December in the first week of January.
