The Bangko Sentral ng Pilipinas (BSP) projects inflation in January to settle within 2.5 to 3.3 percent due to high prices of fuel, food, and water.

In December, inflation stood at 2.9 percent as prices of food, housing, fuel, and electricity rose, according to data from the Philippine Statistics Authority.

"Upward price pressures in January stem from the rise in petroleum prices, increased prices of major food items owing to the lingering effects of recent weather disturbances, as well as the annual adjustments in water rates and sin taxes," BSP said in a statement on Friday.

Several oil companies raised oil prices by P2.00 to P3.00 per liter on 21 January, which the Department of Energy said stemmed from lower global oil supply as the United States and the United Kingdom continued to restrain production and trade of Russian oil.

This serves as a sanction against Russia for invading Ukraine in February 2022.

National statistics show food and non-alcoholic drinks contributed 1.7 percentage points to 3.2 percent average overall inflation last year, after six typhoons hit the country between October and November.

Typhoon Kristine alone left over P11 billion in agricultural and infrastructural damage, pushing up prices of goods due to slowed farm production and delivery of goods.

However, the BSP said overall inflation in January must be tempered by lower prices of electricity and rice.

HSBC economist Aris Dacanay shared that rice prices in Metro Manila declined to P38 per kilo from P40 per kilo in December, after the government reduced tariffs on imported rice and India lifted its export ban on non-basmati white rice.

"Come January, rice prices should deliver a disinflationary impulse. Lower minimum retail rice prices in Manila by 27 December 2024 might have been too late to be reflected in the December inflation figure," he said.

Meanwhile, Meralco said its electricity rates fell to P11.7428 per kilowatt-hour (kWh) from P11.9617 per kWh in January.

The BSP aims to stabilize overall inflation within 2 to 4 percent.

In September 2024, the country posted 1.9 percent inflation, the lowest in four years, as the cheaper rice tariffs began to take effect.

The BSP also gradually reduced its benchmark interest rate starting in October to prevent inflation spikes due to excessive consumer demand for goods and services.

The BSP eased its policy rate by a total of 75 basis points to 5.75 percent last year.

"Going forward, the Monetary Board will continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment," BSP said.

The actual January inflation rate will be announced on 5 February.