The Bangko Sentral ng Pilipinas (BSP) said the December inflation could be a low of 2.9 percent from November’s high of 3.3 percent, or it could move up more to 3.7 percent due to higher prices of some food.

“Higher prices of domestic petroleum products and key agricultural items contributed to upward price pressures during the month,” according to a statement sent by BSP Governor Benjamin E. Diokno.

“These could be partly offset by the downward adjustment in electricity rates in Meralco-serviced areas, along with slightly lower rice prices and the continued appreciation of the peso,” said the BSP.

In November, the BSP’s forecast range missed the number in one of the rare times that it did, as inflation increased to 3.3 percent mainly because of higher inflation for food items such as fish, fruits, and vegetables due to bad weather. The African Swine Fever also continued to affect pork supply and meat prices.

During the Monetary Board’s last policy meeting for 2020 where it decided to keep the key rate unchanged at two percent, the BSP announced the new inflation forecast this year of 2.6 percent from the previous 2.4 percent (November policy meeting) and for 2021, it is now 3.2 percent from 2.7 percent previously. The BSP did not change the previous 2.9 percent inflation forecast for 2022.

Diokno said after the policy meeting that the two percent level is still appropriate, and the Monetary Board thinks an accommodative policy stance with fiscal initiatives “should quicken the economy’s transition toward a sustainable recovery.”

Last November 19 the Monetary Board cut the policy rate by 25 basis points in a surprised move, bringing the total interest rates reduction to 200 bps or by two percent in 2020.