Headline inflation dropped further in December to 8 percent year-on-year from 9.9 percent in November. This brings the average inflation in 2008 to 9.3 percent. Lower fuel prices and slower price increases of food and light, as well as of transportation and communication services accounted for the slowdown of inflation in December. Month-on-month headline inflation was negative 0.9 percent, lower than the negative 0.6 percent recorded in the previous month. Core inflation, which excludes certain specific food and energy items to obtain an underlying measure of generalized price pressures, was also lower at 7.3 percent year-on-year in December from 7.9 percent in November.
Slower year-on-year increases in the prices of fruits and vegetables, rice, fish, cereal preparation, dairy products, and miscellaneous food brought down food inflation, while the two rounds of rollback in the pump prices of gasoline, diesel, and kerosene as well as the reduction in the price of LPG in December led to lower prices of fuel and slower price increases of other petroleum products year-on-year. Downward adjustments in electricity rates in several regions led to lower year-on-year inflation for light.
Governor Amando M. Tetangco, Jr. said that the continuing moderation in inflation pressures has provided monetary authorities room to carefully consider opportunities for policy easing given potential tightening financial conditions. The Governor stressed, however, that the BSP will continue to monitor developments to ensure the attainment of its price stability objective.