Consumer prices quickened even further in December, driven mainly by faster increases in food prices particularly vegetables during the holidays that brought the country’s full-year inflation rate way beyond the government’s target, data from the Philippine Statistics Authority (PSA) showed.

In a briefing on Thursday, Jan. 5, National Statistician Claire Dennis S. Mapa said the country’s headline inflation clocked in at 8.1 percent in the final month of last year, slightly higher than the 8.0 percent in November. The December inflation rate, however, was significantly faster than the 3.1 percent in the same month in 2021, but within the Bangko Sentral ng Pilipinas' forecast of 7.8 percent to 8.6 percent.

Notably, the faster food inflation is driven by higher prices of vegetables at 32.4 percent and sugar at 38.8 percent due to higher input costs and lower production, as weather disturbances in the previous months disrupted farmers’ planting calendar.

Mapa said prices of vegetables and other food items contributed to rising consumer prices, particularly onions, cabbage, and rice, as well as fruits such as bananas.

Red onions, whose prices skyrocketed to over P700 per kilo during the holidays, contributed 0.3 percentage point to the overall inflation in December. On the other hand, all vegetable items shared to 0.9 percentage point.

Higher price index was also seen for electricity, accounting for one percentage point, while restaurant services and transport, contributed 0.7 percentage point and one percentage point, respectively.

Other key agricultural commodities such as meat and fish contributed 0.8 percentage point, while processed food commodities such as sugar and bread and other cereals shared 0.7 percentage point to total inflation.

In addition, the higher demand due to the holiday season pushed inflation up for restaurant and accommodation services at 7.0 percent.

Excluding selected food and energy items, core inflation increased to 6.9 percent in December from 6.5 percent in November. However, this was significantly faster that the 1.8 percent recorded a year earlier.

“The government will continue to prioritize addressing the impact of inflation as it remains to be a challenge not only in the country, but throughout the globe,” Socioeconomic Planning Secretary Arsenio M. Balisacan said.

But he also noted that the decision of President Marcos to extend the validity of the reduced import rate duties on various products such as pork, rice, corn, and coal until December 2023 will help weaken inflation.

“There is an urgent need to modernize the country’s agriculture and agribusiness to increase productivity and ensure that there is adequate, affordable, and nutritious food on the table of every Filipino,” Balisacan said.

Inflation averaged at 5.8 percent from January to December, well above the government’s target band of 2.0 percent to 4.0 percent.

Moreover, the full-year inflation rate accelerated from 3.9 percent in 2021.