PH records lowest 2023 inflation rate of 3.9% in December, meets DBCC assumption of 6.0% for full year 2023

The Philippines’ overall inflation rate further decelerated to 3.9 percent in December 2023––the lowest rate recorded in 2023.

This brings the year-to-date (YTD) headline inflation rate to 6.0 percent, the same as the Development Budget Coordination Committee (DBCC)’s assumption of 6.0 percent for full year 2023.

“Our whole-of-government approach of maintaining price stability, implementing timely non-monetary policy measures, and addressing supply gaps have paid off. Rest assured that the Marcos, Jr. administration is fully prepared to further mitigate the effects of inflation this year amidst global headwinds,” Finance Secretary Benjamin E. Diokno said.

The major drivers of the downtrend in inflation for December were lower year-on-year (YoY) inflation in housing, water, electricity, gas, and other fuels (from 2.5 percent in November 2023 to 1.5 percent), followed by food and non-alcoholic beverages (from 5.7 percent to 5.4 percent).

Meanwhile, the top three commodity groups that contributed to the December 2023 overall inflation were food and non-alcoholic beverages with 2.1 percentage points (ppt) of the overall 3.9 percent; restaurants and accommodation services (0.6 ppt); and housing, water, electricity, gas and other fuels with 8.3 percent share or (0.3 ppt).

Food inflation slowed down to 5.5 percent in December from 5.8 percent in the previous month and 10.6 percent a year ago. However, it continued to have the biggest inflation contribution for the month at 1.9 ppt or 48.5 percent of the overall inflation rate mainly due to rice (1.7 ppt); fish and other seafood (0.3 ppt); and milk, other dairy products, and eggs (0.2 ppt).

Meanwhile, non-food inflation sustained its deceleration at 2.6 percent in December 2023 from 2.9 percent in the previous month and 2.7 percent a year ago.

Non-food inflation in the last month of the year was mainly contributed by food and beverage serving services (0.54 ppt), housing rentals (0.48 ppt), and personal care (0.19 ppt). These are followed by passenger transport services (0.15 ppt) and water supply and miscellaneous services related to the dwelling (0.14 ppt).

Core inflation, which excludes selected volatile food and energy