I don't get the beast thing.
Late reply, but the "monster" is probably both literal and metaphorical in this story.
As a literal monster, it can be interpreted as a crystallization of the protagonist's base instincts (lust, aggression, possessiveness...) going rampant. And, since the mind makes it real in this universe, the monster is slowly taking control of Arata's mind and possessing him. In short, think of it as a psychic entity that gained too much control, became too real, and is now wrecking havoc in our MC's brain.
As a metaphor, I like to interpret it as a representation of Arata's Shadow, in the Jungian sense. Think of it as a part of Arata's subconscious pulling the danger alarm and showing him how ugly he is becoming inside. The meeting with the shadow, according to Jung's theory, is always painful and makes us aware of things we unconsciously repress, parts of ourselves that we do not exploit to their full potential or defaults we fail to recognize in ourselves. I think you should read more on it, it's all very interesting and I've probably butchered the concept.
As I've said, given the nature of the story, it's probably both.