THE Philippines’ headline inflation or overall inflation slowed down further to 3.9 percent in December 2023, the lowest inflation rate for 2023. In November 2023, inflation rate was recorded at 4.1 percent and in December 2022, it was at 8.1 percent.
Main Drivers to the Downward Trend of the Headline Inflation
The downtrend in the overall inflation in December 2023 was primarily brought about by the lower year-on-year growth in the index of housing, water, electricity, gas and other fuels at 1.5 percent in December 2023 from 2.5 percent in the previous month. This was followed by food and non-alcoholic beverages with 5.4 percent inflation during the month from 5.7 percent in November 2023.
Lower annual increments were also noted in the indices of the following commodity groups during the month:
a. Clothing and footwear, 4.2 percent from 4.3 percent;
b. Furnishings, household equipment and routine household maintenance, 4.5 percent from 4.7 percent;
c. Health, 3.7 percent from 3.8 percent;
d. Information and communication, 0.5 percent from 0.6 percent;
e. Recreation, sport and culture, 4.2 percent from 4.9 percent; and
f. Personal care, and miscellaneous goods and services, 4.6 percent from 4.8 percent.
On the contrary, the index of transport exhibited an annual increase of 0.4 percent during the month from an annual decrease of 0.8 percent in November 2023.
The indices of the rest of the commodity groups retained their respective previous month’s annual rates.
Main Contributors to the Headline Inflation
The top three commodity groups contributing to the December 2023 overall inflation were the following:
a. Food and non-alcoholic beverages with 53.0 percent share or 2.1 percentage points;
b. Restaurants and accommodation services with 14.0 percent share or 0.6 percentage point; and
c. Housing, water, electricity, gas and other fuels with 8.3 percent share or 0.3 percentage point.
Annual Average Inflation Rate
The Philippines’ annual average inflation rate for 2023 stood at 6.0 percent, which was higher than the 2022 annual average inflation rate of 5.8 percent.
Compared with their respective annual average inflation rates in 2022, the indices of the following commodity groups recorded higher annual average inflation rates in 2023:
a. Food and non-alcoholic beverages, 7.9 percent from 5.9 percent;
b. Alcoholic beverages and tobacco, 10.7 percent from 7.9 percent;
c. Clothing and footwear, 4.8 percent from 2.6 percent;
d. Furnishings, household equipment and routine household maintenance, 5.6 percent from 3.2 percent;
e. Health, 3.9 percent from 2.6 percent;
f. Information and communication, 0.7 percent from 0.6 percent;
g. Recreation, sport and culture, 4.7 percent from 2.3 percent;
h. Education services, 3.6 percent from 1.8 percent;
i. Restaurants and accommodation services, 7.4 percent from 4.1 percent; and
j. Personal care, and miscellaneous goods and services, 5.4 percent from 3.0 percent.
On the other hand, slower annual average increases were observed in the indices of housing, water, electricity, gas and other fuels at 4.9 percent in 2023 from 6.4 percent in 2022, and transport at 1.6 percent in 2023 from 12.9 percent in 2022. Meanwhile, financial services recorded a zero percent annual average inflation rate in 2023 from 8.2 percent annual average inflation rate in 2022.
