Consumer prices in December accelerated for the third consecutive month, but a sharp decline in rice prices helped ease the impact, particularly on poor households, with rice inflation slowing to its lowest level in three years.

Data from the Philippine Statistics Authority (PSA) revealed that the country’s headline inflation rate increased to 2.9 percent in December last year, continuously rising from 2.5 percent in November. 

According to Claire Dennis S. Mapa, PSA undersecretary and national statistician, the main factor behind this rise was the quicker growth in the prices of housing, water, electricity, gas, and other fuels, which accounted for over half (52.9 percent) of the overall inflation uptrend.

The country’s core inflation rate—excluding food and energy commodities with volatile prices—also went up to 2.8 percent in December from 2.5 percent in November. 

Meanwhile, the average inflation for 2024 settled at 3.2 percent, nearly twice slower than the six percent rate in 2023, aligning with market expectations. This figure falls comfortably within the upper bracket of the government's two- to four-percent target band.

National Economic and Development Authority (NEDA) said in a Jan. 7 statement that the Philippine government has been successful in meeting its 2024 inflation target, further promising to continue its measures against sharp increases in consumer prices.

The PSA reported that the annual average inflation rate was mainly due to a sharp decrease in inflation for food and non-alcoholic beverages, which fell to 4.4 percent in 2024 from 7.9 percent in 2023, when the pandemic had just ended.

PSA said the decline in the annual average inflation rate was primarily driven by significantly lower inflation for food and non-alcoholic beverages, which fell to 4.4 percent in 2024 from 7.9 percent in 2023.

Rice inflation slowdown

Rice inflation saw a notable drop in December 2024, slowing significantly to 0.8 percent from 5.1 percent in November. This record marks the slowest acceleration in rice prices since January 2022 at one percent. 

Despite an overall rise in headline and core inflation, as well as in Metro Manila and areas outside it, rice price adjustments helped ease the burden on lower-income groups or poor households.

Inflation for the bottom 30 percent of income households dropped from 2.9 percent in November to 2.5 percent in December, mainly due to a slowdown in rice inflation. 

“Rice makes up 20 percent of the consumption basket for the bottom 30 percent of income households,” Maps said, explaining that “one-fifth of their consumption is either rice or corn, with rice accounting for 17.9 percent, or roughly 18 percent.” 

From 5.4 percent in November, the inflation rate for rice significantly decreased in December to 0.7 percent. This, according to Mapa, was the key factor in the slowdown of the inflation rate for the poor households.

According to the Mapa, Rice prices have been on the downtrend over the last three months of 2024. In October, the price was P50.22 per kilo, which decreased to P49.24 in November, and further dropped to P48.81 in December. It started at P49.65 at the beginning of 2024.

“So, this is what I’m saying—that there is indeed a possibility for rice inflation to turn negative this January,” Mapa said, meaning prices may continue to decrease.

NEDA Secretary Arsenio M. Balisacan said that despite the risks the government had faced, “combined efforts to temper inflation have largely been successful,” committing further to “build upon this momentum as we commit to keep the inflation rate within our target range in 2025.” 

The Department of Social Welfare and Development (DSWD) plans to extend its Local Adaptation to Water Access (LAWA) and Breaking Insufficiency through Nutritious Harvest for the Impoverished (BINHI) projects to 323 cities and municipalities in 67 provinces by 2025.

Likewise, NEDA anticipates that the recent amendment to the Agricultural Tariffication Law will strengthen the rice sector’s resilience, with the Rice Competitiveness Enhancement Fund increasing to P30 billion annually, up from P10 billion, until 2031.