Inflation accelerates in Q1 for low-income households — PSA

INFLATION, as experienced by low-income households, accelerated to a three-year high in the first quarter of 2018 on account of higher prices for food and utilities, the Philippine Statistics Authority (PSA) reported yesterday.

Consumer prices for the bottom 30% of households saw inflation rising to 5.3% in the first quarter, up from 3.5% logged in the fourth quarter of 2017 and 2.8% a year earlier. The first-quarter reading was the highest reading since 6.8% posted in the third quarter of 2014.

For all households, the PSA is scheduled to report April inflation data on Friday.

The Consumer Price Index for the bottom 30% income segment reconfigures the model basket of goods to reflect a heavier weighting for food, beverages and tobacco ( FBT) index. This and other weightings are thought to more accurately capture the spending patterns of the poor.

“Higher excise taxes on selected sweetened beverages led upward prices of these items in most of the regions. Price gains in kerosene and cigarettes also contributed to the uptrend. On the other hand, lower charges in electricity rates were observed in many regions including NCR (National Capital Region) during the quarter,” the PSA said in a statement.

The fuel, light, and water index led the uptick in prices as inflation in this segment rose 6.1%, which was slower than the 6.3% recorded in the fourth quarter and 6.2% a year earlier.

Meanwhile, the FBT index rose 5.9% in the first quarter from 3.6% in the fourth quarter and 2.8% a year earlier.

The food index increased 5.3% from 3.4% in the fourth quarter and 2.7% a year earlier.

The PSA said rice prices rose 3.1% from 1.3% in the fourth quarter. Also rising were prices for corn ( 8.5% from 5.5%); cereal preparations ( 2.1% from 1.7%); dairy products (1.6% from 1.1%); eggs (2.1% from 1.6%); fish ( 11.5% from 9.4%); fruits and vegetables ( 6.5% from 3.4%); meat ( 7.3% from 5.8%); and “miscellaneous foods” ( 0.60% from minus 0.10%)

Inflation for the bottom 30% segment in the NCR was 5.9%, accelerating from the 4.7% recorded in the fourth quarter of 2017. Those outside the NCR saw a price pickup of 5.3% from 3.4% in the previous quarter.

“The lower 30% were actually previously tax-free or did not necessarily pay taxes because of their meager incomes in the first place. This segment of the population is supposed to be the target of unconditional cash transfers that were rolled out past March,” Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines, said.

Still, the economist noted that “[d]efinitely, they are not at an advantage” with regard to the price upticks seen in necessities such as utilities and food.

“I hope the safety nets work,” he added.

Moving forward, Mr. Asuncion noted that inflationary pressures for the bottom 30% “are starting to slow,” but are still expected to “remain elevated in the next coming months, mirroring overall inflation.” —