DoF estimates Dec. inflation moderating to 3.2%

THE Department of Finance (DoF) expects headline inflation to have eased further in December on steady food and power prices.

“Inflation in December of last year is expected to have moderated to 3.2%, down from the previous month’s 3.3%, on the back of more stable food prices and lower power costs,” the DoF said in an economic bulletin yesterday.

If the estimate pans out, December’s inflation rate will be significantly higher than the year-earlier 2.6%.

The DoF’s estimate was lower than the 3.3% median from a poll of 12 economists conducted by BusinessWorld.

The Bangko Sentral ng Pilipinas ( BSP) meanwhile gave a 2.9-3.6% range in estimating December inflation last week.

The Philippine Statistics Authority will report off icial inflation data on Friday.

Food and non- alcoholic beverage price growth is thought to have steadied at 3.2% in December, compared with 3.6% a year earlier, according to DoF’s bulletin.

Price growth in housing, utilities, and fuels meanwhile may have slowed to 3.7% from 4.2% in November. The year- earlier rise was 1.3%.

The rise in transport costs is also thought to have moderated to 2.8% in December from 4.4% a month earlier. The year-earlier price growth level was 1.9%.

The DoF said that the moderating price growth should support continued robust macroeconomic conditions, especially after the enactment of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

“Low inflation is an indication that the country’s macroeconomic fundamentals remain strong. Solid fundamentals backed by TRAIN 1 implementation, rice sector reform and the Build, Build, Build policy will push the country’s growth to seven to 8% this year and sustain manageable inflation,” according to the bulletin.

The tax reform program, which takes effect this year, lowered personal income, estate, and donor’s taxes, removed some value-added tax exemptions, while increasing the excise tax on coal, minerals, fuel, some automobiles, and some passive- income items. It also introduced new levies on cosmetic procedures and sugar- sweetened beverages.

A portion from the incremental revenue from TRAIN will help fund the government’s infrastructure program. —