The Bangko Sentral ng Pilipinas believes inflation in December likely settled within the range of 3.6 percent to 4.4 percent.

The BSP projection comes close to the November inflation of 4.1 percent and is faster than the government target of 2 to 4 percent.

The central bank said high prices of certain food items signal a still elevated inflation forecast.

 Primary price pressure source

"Higher prices of rice and meat are seen as the primary sources of upward price pressures in December," the BSP said in a statement released Friday.

Data from the Philippine Statistics Authority show rice and bread last month were the top contributors to food inflation which had 2 percentage points in the overall inflation during the period.

Meanwhile, meat prices only inched down to 0.5 percent from 0.8 percent inflation between October and November.

The BSP said the dry climate caused by El Niño continues to threaten high prices of rice due to possible supply shortage.

To address such risk, the central bank officials stressed the creation and implementation of effective measures, such as strategic importation and widespread irrigation, by the Department of Agriculture and related agencies.

On the other hand, the BSP said prices of other food items had been declining which supports either a moderate or negative growth in overall inflation for December.

Lower prices

"Meanwhile, lower prices for agricultural items such as vegetables, fruits, and fish along with lower electricity rates and petroleum prices are expected to contribute to downward price pressures," the central bank said.

An industry analysis by Reuters reveals global oil prices could fall further by 10 percent by the end of the year, as announcements by the Organization of the Petroleum Exporting Countries to cut production have proved "insufficient."

Reuters data show oil prices already declined by 3 percent.

Bloomberg data on Friday showed WTI Crude Oil and Brent Crude prices slightly rose by 0.28 percent and 0.43 percent growth, respectively.