Central Luzon’s Inflation Accelerates to 3.3 Percent

The annual inflation rate of Central Luzon accelerated to 3.3 percent in December 2024. This results to the region’s average inflation rate of 3.9 percent from January to December 2024. Meanwhile, inflation was higher in December 2023 at 4.8 percent. (Figure 1)

1.    Headline Inflation

1.1    Main Drivers to the Upward Trend of the December 2024 Inflation

The upward trend in overall inflation in Central Luzon in December 2024 was primarily due to the faster increase in the index for food and non-alcoholic beverages, which rose to 3.6 percent from 2.8 percent in the previous month. Transport also contributed to the upward trend in inflation, shifting from an annual decline of 1.3 percent in November 2024 to an annual increase of 0.3 percent in December 2024. Additionally, housing, water, electricity, and other fuels contributed to the uptrend, as it recorded a faster annual increase of 3.2 percent in December 2024 from 2.7 percent in November 2024.

Furthermore, higher annual increment was observed in the index of personal care and miscellaneous goods at 3.6 percent from 3.5 percent and furnishings, household equipment and routine household maintenance at 2.5 percent from 2.4 percent.  Additionally, transport also recorded an increase from -1.3 in November 2024 to 0.3 percent.

In contrast, lower annual increment was observed in following commodity groups:
•    Recreation, sport and culture, 2.8 percent from 3.0 percent;
•    Health, 2.6 percent from 2.7 percent;
•    Clothing and footwear, 2.1 percent from 2.2 percent; and
•    Information and communication, 0.4 percent from 0.5 percent.

Meanwhile, the indices of the following commodity group remained at their respective previous month’s annual rates: 
•    Alcoholic and Beverages, 3.3 percent;
•    Education Services, 2.2 percent; and
•    Financial Services, -0.3 percent. (Table 1)
 

1.2 Main Contributors to the December 2024 Inflation

The top three commodity groups contributing to the Central Luzon’s overall inflation rate in December 2024 were as follows:

•    Food and non-alcoholic beverages, 3.6 percent inflation with 40.5 percent share or 1.34 percentages point;
•    Restaurants and accommodation services, 6.6 percent inflation with 21.7 percent share or 0.72 percentage point; and 
•    Housing, water, electricity, gas and other fuels, 3.2 percent inflation with 19.6 percent share or 0.65 percentage point.

2.    Annual Average Inflation

Central Luzon’s annual average inflation for the year 2024 is at 3.9 percent which is significantly lower than the 2023 annual average inflation of 6.9 percent. (Table 2.1)

2.1    Main Drivers to the Downward Trend of the 2024 Annual Average Inflation

The annual average inflation decreased from 6.9 percent in 2023 to 3.9 percent in 2024. The top three major contributors to this downtrend were the following:
•    Food and non-alcoholic beverages, 4.3 percent from 8.5 percent;  
•    Housing, water, electricity, gas and other fuels, 3.2 percent from 4.8 percent; and
•    Alcoholic Beverages and Tobacco, 4.8 percent from 13.8 percent.

Apart from education services, the annual average inflation indices of the other commodity groups also showed a downtrend in 2024 compared to 2023. 

In contrast, education services recorded a higher annual average increase, rising to 4.8 percent in 2024 from 3.5 percent in 2023. (Table 2.2)

2.2 Main Contributors to the 2024 Annual Average Inflation

The top three commodity groups contributing to the 2024 annual average inflation were the following:
•    Food and Non-Alcoholic Beverages, with 40.9 percent share or 1.59 percentages point;
•    Restaurants and Accommodations Services, with 19.2 percent share or 0.75 percentage point; and
•    Housing, Water, Electricity, Gas and Other Fuels, with 16.5 percent share or 0.62 percentage point.

3.    Food Inflation

3.1    Main Drivers and Contributors to the Food Inflation

Food inflation in Central Luzon also moved at a faster pace from 3.0 percent in November 2024 to 3.8 percent in December 2024. In December 2023, food inflation was significantly higher at 5.5 percent.

The upward trend as well as the overall food inflation in Central Luzon in December 2024 was largely driven by the increase in the index for vegetables, tubers, plantains, cooking bananas, and pulses, which surged to 27.6 percent from 10.3 percent in November 2024. Another contributing factor was the inflation for meat and other parts of slaughtered land animals, which climbed from 3.7 percent in November 2024 to 5.3 percent in December 2024. Furthermore, fish and other seafood also added to the upward trend, recording an inflation of 2.1 percent in December 2024. 

Moreover, the following food indices posted higher inflation rates in December 2024:
•    Flour, Bread and Other Bakery Products, Pasta Products, and Other Cereals, 
2.4 percent from 2.3 percent; and
•    Oils and fats, 1.9 percent from 0.7 percent.

On the other hand, a decline in inflation was observed in the index of rice at -3.9 percent from 1.2 percent, and in fruits and nuts at 5.0 percent from 5.4 percent in the previous month.
Meanwhile, the following food groups remained constant for the current month:
•    Ready-made food and other food products n.e.c, 4.1 percent;
•    Milk, other dairy products and eggs, 2.0 percent; and
•    Sugar, confectionery and desserts, 1.8 percent. (Table 3)

4.    Annual Average Food Inflation

4.1    Main Drivers to the Downward Trend of the 2024 Annual Average Food Inflation

In 2024, the annual average food inflation rate was observed at 4.5 percent, lower than the recorded annual average food inflation rate of 8.5 percent in 2023. The downward trend in annual average food inflation in Central Luzon in 2024 was primarily influenced by the following indices:
•    Vegetables, tubers, plantains, cooking bananas and pulses, 0.1 percent inflation from 17.9 percent inflation in 2023;
•    Milk, other dairy products and eggs, 1.2 percent inflation from 13.2 percent inflation in 2023; and
•    Fish and other seafood, 0.6 percent inflation from 6.6 percent inflation in 2023.

4.2    Main Contributors to the 2024 Annual Average Food Inflation

The top three commodity groups contributing to the Central Luzon’s annual average food inflation in 2024 were as follows: 
•    Cereals and cereal products, 11.8 percent inflation with 75.0 percent share or 3.37 percentages point;
•    Meat and other parts of slaughtered land animals, 2.5 percent inflation with 11.2 percent share or 0.50 percentage point; and 
•    Fruits and nuts, 7.6 percent inflation with 6.4 percent share or 0.29 percentage point.

Moreover, other commodity groups aside from the things mentioned above recorded a lower inflation rate in 2024 compared in 2023. (Table 3.2)

ARLENE M. DIVINO
Regional Director 
PSA RSSO 03