· The year-on-year headline inflation rate in the Philippines continued to decelerate as it settled to 8.0 percent in December from 9.9 percent in November. This was effected by the negative annual growth rate posted in the fuel, light and water (FLW) index and the continued slowing down in the annual price increases of the heavily weighted food, beverages and tobacco (FBT) and the services index. Inflation a year ago was 3.9 percent.

· The country’s average annual headline inflation rate for the year 2008 was 9.3 percent compared to 2.8 percent a year ago.

· Similarly, the annual inflation in the National Capital Region (NCR) further slowed to 4.5 percent in December from 6.8 percent in November brought about by the slower annual price increments of all the commodity groups except for H&R and miscellaneous index. The annual average inflation in the area for 2008 was 6.9 percent, higher by 4.3 percentage points than the 2.6 percent in 2007.

· The annual price movements in Areas Outside the National Capital Region (AONCR) followed the same trend as its year-on-year inflation further slid to 9.6 percent in December from 11.2 percent in November. This was due to the slower annual price increments in FBT and services index along with the negative annual price adjustments in the FLW index. The average inflation for the year was higher at 10.4 percent compared to 2.8 percent in 2007.

• Excluding selected food and energy items, core inflation eased to 7.3 percent in December from 7.9 percent in November. The annual average core inflation rate was 6.2 percent in 2008 from 2.8 percent in 2007.

• Consumer prices further dropped by -0.9 percent in December from -0.6 percent in November. This was primarily due to the continued reductions in the prices of LPG, kerosene, gasoline and diesel nationwide. Downward adjustments in the electricity rates in many regions along with price reductions in selected food items such as rice, corn, vegetables and some spices and seasonings also contributed to the overall decline in the month-on-month inflation rate.

CONSUMER PRICE INDEX
(2000=100)
DECEMBER 2008

By Region, Year-on-Year

• The annual inflation rate in NCR further decreased by 2.3 percentage points to 4.5 percent in December from 6.8 percent in November.
• The annual inflation rate in AONCR likewise eased to 9.6 percent in December from 11.2 percent in November as all the regions continued to post slower annual inflation rates. The biggest slowdown of 2.8 percentage points was registered in Eastern Visayas (13.7% from 16.5%) and Caraga (13.4% from 16.2%). The lowest inflation in December at 7.4 percent was observed in CALABARZON while the highest was still noticed in Eastern Visayas at 13.7 percent.
• Among the regions in AONCR, the lowest annual average inflation rate in 2008 was recorded in CALABARZON at 6.7 percent while Caraga posted the highest annual average inflation at 13.4 percent.

By Commodity Group, Year-on-Year

• At the national level, a negative annual rate was noted in the prices of FLW items at -1.7 percent in December from 7.5 percent in November. Slower annual price increases were also correspondingly registered in FBT and services items at 12.7 percent and 4.6 percent from 13.8 percent and 7.5 percent, respectively. On the contrary, annual price increments were higher in clothing and miscellaneous items at 5.0 percent and 3.9 percent, respectively from their corresponding last month’s rates of 4.9 percent and 3.8 percent. Annual price additions in the H&R items remained at 5.3 percent.
• The annual inflation rate for food alone in the Philippines further improved to 13.3 percent in December from 14.5 percent in November.
• The annual price adjustment in rice was slower at 28.7 percent in December from 30.0 percent in November; cereal preparations, 18.6 percent from 19.3 percent; dairy products, 11.9 percent from 12.9 percent; fish, 9.0 percent from 9.6 percent; fruits and vegetables, 7.0 percent from 11.7 percent; and miscellaneous foods, 8.0 percent from 8.6 percent. On the other hand, higher annual price hike was posted in eggs at 5.7 percent from 5.5 percent while the annual price gains in corn and meat remained at their corresponding last month’s rates of 26.3 percent and 9.1 percent.
• The annual average inflation for food alone in 2008 was higher at 13.6 percent compared to 3.3 percent a year ago.
• The 2008 annual average inflation rate in FBT index was higher at 12.9 percent from 3.3 percent in 2007; clothing, 4.2 percent from 2.3 percent; H&R, 4.3 percent from 1.5 percent; FLW, 6.5 percent from 3.2 percent; services, 8.6 percent from 2.8 percent; and miscellaneous items, 2.9 percent from 1.6 percent.
• In NCR, annual inflation for the FBT index moved at slower pace of 8.2 percent in December from 9.3 percent; clothing, 5.5 percent from 5.6 percent; FLW, 0.6 percent from 10.5 percent; and services, 1.6 percent from 5.6 percent. However, annual inflation for the miscellaneous items index was higher at 2.9 percent from 2.8 percent while that for H&R index remained at 3.3 percent.
  • Inflation rate for food alone in NCR further decelerated to 8.4 percent in December from 9.5 percent in November.
  • Negative annual rates were correspondingly posted in the eggs and fruits and vegetables index at -1.2 percent and -0.5 percent in December from their respective last month’s rates of -1.9 percent and 7.2 percent. Moreover, the annual price increase in rice was slower at 27.0 percent from 27.4 percent; corn, 0.7 percent from 2.4 percent; cereal preparations, 18.1 percent from 19.3 percent; dairy products, 10.9 percent from 11.9 percent; and miscellaneous foods, 5.4 percent from 6.1 percent. On the other hand, the annual inflation for fish and meat were higher at 6.1 percent and 6.3 percent, respectively from their corresponding last month’s rates of 5.6 percent and 5.5 percent.
  • The annual average inflation rate of the group at 10.5 percent in 2008 was higher by 7.2 percentage points from the 3.3 percent in 2007.
  • The annual average inflation for all the commodity groups in NCR was higher in 2008 compared to their last year’s rates except for FLW whose annual average inflation at 2.8 percent was lower compared to 3.0 percent in 2007. Annual average inflation for the FBT index was at 10.1 percent in 2008 from 3.3 percent in 2007; clothing, 5.1 percent from 2.7 percent; H&R, 2.5 percent from 1.2 percent; services, 9.5 percent from 3.0 percent; and miscellaneous items, 1.9 percent from 1.2 percent.
• In AONCR, negative annual rate of price adjustment was recorded in FLW index at -2.8 percent in December from 5.9 percent in November. In addition, annual inflation rates for FBT and services index continued to slow down at 14.2 percent and 6.3 percent, respectively from their corresponding last month’s rates of 15.2 percent and 8.6 percent. Annual inflation for clothing, H&R and miscellaneous items index remained at their respective previous month’s rates of 4.8 percent, 6.7 percent and 4.2 percent.
  • On an annual basis, prices of food alone items in AONCR further slipped to 14.8 percent in December from 16.0 percent in November.
  • Annual price gain in rice was at 28.9 percent in December, slower than the 30.3 percent growth in November as all the regions except MIMAROPA and Western Visayas posted lower annual rates. Eastern Visayas recorded the biggest slowdown of 4.7 percentage points (32.9% from 37.6%).
  • Improved annual price hike in cereal preparations was also noted at 18.8 percent from 19.4 percent; dairy products, 12.4 percent from 13.3 percent; fish, 9.6 percent from 10.4 percent; fruits and vegetables, 9.3 percent from 13.1 percent; meat, 10.3 percent from 10.8 percent; and miscellaneous foods, 9.2 percent from 9.7 percent. However, annual price increments in the corn and eggs index remained at 26.7 percent and 7.9 percent, respectively.
  • The 2008 average inflation of the food alone group at 14.6 percent was higher by 11.4 percentage points from 3.2 percent in 2007.
  • Compared with last year, all the commodity groups in AONCR have higher annual average inflation rates in 2008. Annual average inflation for FBT was recorded at 13.8 percent from 3.2 percent; clothing, 3.9 percent from 2.2 percent; H&R, 5.7 percent from 1.8 percent; FLW, 8.5 percent from 3.3 percent; services, 8.0 percent from 2.6 percent; and miscellaneous items, 3.3 percent from 1.7 percent.

By Region, Month-on-Month

• Prices in NCR further declined at -1.3 percent in December from -0.7 percent in November. This was attributed to the reductions in the prices of FLW items as its growth rate dropped by -6.6 percent and services items at -3.4 percent. Prices of FBT and H&R items however correspondingly went up at higher rates of 0.5 percent and 0.1 percent from -0.2 percent and zero growth, respectively. Price increases in miscellaneous items remained at 0.2 percent while prices for clothing items generally remained stable as it posted a zero growth rate during the month.
• Prices in AONCR also further fell by -0.8 percent in December from -0.5 percent in November. Prices of FBT, FLW and services items continued to post corresponding negative rates of -0.1 percent, -5.6 percent and -1.8 percent from their respective previous month’s rates of -0.3 percent, -2.4 percent and -1.2 percent. Slower price addition in miscellaneous items at 0.2 percent from 0.3 percent was also observed. Meanwhile, price uptick in clothing and H&R items remained at 0.2 percent and 0.1 percent, respectively.
• Consumer prices generally declined in all the regions with the biggest monthly rate of -1.1 percent seen in Ilocos, CALABARZON and Caraga.
• Among the three big areas of the country, price decreases were bigger in Luzon compared to Visayas and Mindanao areas.

By Commodity Group, Month-on-Month

• At the national level, consumer prices further dropped by -0.9 percent in December from -0.6 percent in November. This was due to the continued decline in the prices of FLW and services items at -5.9 percent and -2.4 percent, respectively from their corresponding last month’s rates of -1.1 percent and -2.0 percent. Price additions in clothing and miscellaneous items remained at 0.2 percent and H&R items, 0.1 percent. Prices of FBT items generally remained stable as it recorded a zero growth due to mixed trends in food prices during the month.
• The rice index in the Philippines, NCR and AONCR continued to post corresponding negative monthly growth rates of -0.9 percent, -0.4 percent and -1.0 percent. Sufficient supply of rice in the markets brought about the downtrend. The biggest decrease of -3.5 percent in the group’s index was seen in Caraga.
• Lower prices of corn pulled down its index in the Philippines and AONCR by -0.3 percent from 0.7 percent. Meanwhile, prices of corn in NCR generally remained stable as its group’s index had still a zero growth rate.
• Sufficient deliveries of vegetables in the NCR markets coming from the nearby provinces pushed down their prices during the month. Abundant supply of fruits in the markets also lowered their prices. Thus, the fruits and vegetables index in the Philippines and NCR fell by -0.3 percent and -1.9 percent, respectively. However, mixed trend in the prices of fruits and vegetables in AONCR resulted to an aggregate increase of 0.2 percent in the group’s index.
• The continued reductions in the prices of sugar and selected spices and seasonings in NCR caused the miscellaneous foods index in the area to decline by -0.1 percent. Similarly, lower prices of these items together with cooking oil were recorded in many regions in AONCR, hence, its miscellaneous foods index dropped by -0.2 percent from 0.1 percent.
• The difficulty in catching fish species during the cold weather conditions that coincided with the moonlight nights limited the volume of fish supply in the markets. This factor raised the fish index in the three areas: Philippines, 1.1 percent from 0.4 percent; NCR, 3.9 percent from 1.0 percent; and AONCR, 0.5 percent from 0.3 percent.
• Higher demand for meat and meat products during the holiday season pushed up prices of meat in the Philippines by 0.7 percent from zero growth; NCR 1.6 percent from 0.3 percent; and AONCR, 0.2 percent from -0.1 percent.
• The FLW index in the Philippines went down by -5.9 percent from -1.1 percent; NCR, -6.6 percent from 1.4 percent; and AONCR, -5.6 percent from -2.4 percent. This was brought about by the continued price cuts in LPG and kerosene nationwide along with the lower charges for electricity rates in many regions including NCR.
• With price rollbacks in gasoline and diesel nationwide, the services index in the Philippines and AONCR further declined by -2.4 percent and -1.8 percent from their corresponding last month’s rates of -2.0 percent and -1.2 percent. In NCR, the group’s index continued to post a decrease of -3.4 percent, the same rate recorded in November.

NOTE: CPIs and inflation rates by province and selected city are also available upon request at NSO, Industry and Trade Statistics Department, Economic Indices and Indicators Division (Telephone Numbers: 716-39-35 and 715-33-47).

Source: National Statistics Office
Manila, Philippines