MANILA: The Philippine central bank intends to keep interest rates low "for the next few quarters", Governor Benjamin Diokno said, playing down the risk of higher prices even as inflation in December hit the highest level since February, 2019.

The Consumer Price Index rose 3.5% in December from a year earlier, driven by the heavily-weighted food and non-alcoholic beverages sector, the statistics agency said on Tuesday.

The figure topped the median 3.1% forecast in a Reuters poll and was near the top end of the central bank's projected range of 2.9%-3.7%.

Full-year 2020 inflation averaged 2.6%, still comfortably within the official target range of 2%-4%.

Core inflation, which excludes volatile food and fuel prices, picked up to 3.3% from 3.2% in November.

In an interview with ANC News Channel, Diokno described the uptrend in inflation as "transitory" and said it was "the least of our worries".

In a separate statement, he said December inflation reflected the short-term impact of weather disturbances.

The Philippines was hit by a series of powerful typhoons late last year.

"The overall balance of risks to future inflation continues to lean toward the downside owing mainly to the continued uncertainty caused by the pandemic on domestic and global economic activity," he said.

The Bangko Sentral ng Pilipinas slashed interest rates by a cumulative 200 basis points last year, making it one of the most aggressive central banks worldwide in policy easing.

It also provided extra liquidity support by purchasing government securities and extending loans to the government.

The central bank is set to review monetary policy on Feb. 11.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp, said inflation should now remain benign until February, justifying more monetary easing, before prices potentially push higher again from March.