DOF sees higher inflation in March

May reach 4.1%

The rate of increase in consumer prices likely accelerated further last moth due to higher levies imposed by the government on “sin” products, the Department of Finance (DOF) said.

Based on its latest Economic Bulletin, the finance department estimated that inflation in March reached 4.1 percent, quicker than the previous month’s 3.9 percent and the 3.1 percent in the same month last year.

The DOF’s inflation forecast used the new 2012 base. But using the old 2006 series, consumer prices increased by 5.0 percent last month, the fastest since October 2011’s 5.2 percent.

“Sin products are significantly driving the inflationary pressure. Of the 4.1 percent forecast inflation rate for March, sin products account for as much as 0.5 percentage point, much higher than their contribution of only 0.16 percentage point in the same month last year,” the DOF said.

According to the DOF, the yearon-year change is dominated by sin products increasing by 22.45 percent, while food and non-alcoholic beverages jumped by 5.25%.

“Sin products and non-alcoholic beverages were affected by temporary tax issues while fish appears to be still affected by rough seas and vegetables, by unfavorable weather,” the finance department said.

The country’s consumer price index rose 3.9 percent in February from 3.4 percent in the previous month based on 2012 prices. But using 2006 prices as base, inflation quickened to 4.5 percent from 4.0 percent last January.

The Duterte administration’s economic team set its inflation target at 2.0 percent to 4.0 percent this year, data from the National Economic and Development Authority (NEDA) showed.

In February, price of food and nonalcoholic beverages jumped 4.8 percent, while transport was at 5.8 percent, alcoholic beverages and tobacco at 16.9 percent, and furnishing, household equipment, and routine maintenance of the house at 2.5 percent.

Prices of restaurant and miscellaneous goods and services, meanwhile, increased by 2.5 percent during the month, while clothing and footwear rose 2.0 percent.

“The transitory impact of the TRAIN [tax reform for acceleration and including] law and the continued depreciation of the Philippine peso will mainly influence price movements in the coming months, and we must ensure that mitigating measures should be in place,” NEDA said.

Finance Undersecretary and Chief Economist Gil S. Beltran earlier said the spike in consumer prices in February cannot be attributed mainly to the recently enacted tax reform law of the Duterte administration.

Beltran explained the tax reform for acceleration and inclusion (TRAIN) act only contributed less than 10 percent to inflation, which accelerated by 3.9 percent last February.

He also said the biggest item — restaurants and miscellaneous services — rose by 0.24 percentage point in February due to higher prices of food inputs including sugar-sweetened beverages. Beltran added that transport pushed up the index by 0.10 percentage point as private transport fuel rose by 7.2 percent.