Inflation to continue above 2% — DoF
THE FINANCE DEPARTMENT expects headline inflation to increase in the near term but the indicator will remain within the government’s targeted range, amid rising energy prices after oil-exporting countries cut production.
“Inflation will likely clock above 2.0% in the coming months as suggested by [January] core inflation of 2.5%. Rising energy prices will contribute to higher inflation,” Department of Finance (DoF) Undersecretary and Chief Economist Gil S. Beltran said in a recent report to Finance Secretary Carlos G. Dominguez III.
The projected rise is within the Bankgo Sentral ng Pilipinas’ target band of 2-4% headline inflation.
Core inflation, which strips out volatile items such as food and energy, remained at 2.5% in January compared with the previous month, but grew 0.7% from a year earlier, according to the Philippine Statistics Authority.
Headline inflation meanwhile grew to 2.7% last month — the fastest pace in two years — increasing by 1.4% year on year, and from December’s 2.6% on the back of higher food prices.
January was the fifth straight month of inflation surpassing 2%, beginning with the 2.3% recorded in September.
Moreover, Mr. Beltran noted that the uptick in energy prices is primarily due to the decision of the Organization of the Petroleum Exporting Countries (OPEC) to cut oil output in December.
The World Bank expects oil prices to hit $55 per barrel this year, from $42.8 in 2016.
That estimate is at the high end of the multi-agency Development Budget Coordinating Committee consensus of $40-55 per barrel.
Assuming prices fall within government’s programmed range, Mr. Beltran said macroeconomic fundamentals will remain intact.
“This will provide economic authorities flexibility to maintain rapid growth despite uncertainties in the world economy,” said Mr. Beltran.
According to the DoF’s economic bulletin, the average price of gasoline hit P46.6 per liter last month from P44.8 in December.
Diesel on the other hand rose to P30.8 in January from P29.1 a month earlier.
Manila Electric Co. (Meralco) — the largest energy distributor in the country — said however that the electricity cost per kilowatt hour ( kWh) for an average monthly consumption of 300 kWh slid to P8.4 last month from P8.7 in December.
Its generation charge per kWh in January meanwhile dipped to P3.7 from P3.9. —