Manila Bulletin

In­fla­tion seen ris­ing fur­ther but within gov’t tar­get


The rate of in­crease in con­sumer prices may rise in the com­ing months but the Depart­ment of Fi­nance (DOF) ex­pects this to be within the gov­ern­ment’s in­fla­tion tar­get.

Based on the lat­est DOF Eco­nomic Bul­letin, the coun­try’s in­fla­tion rate could rise to above 2.0 per­cent in the near-term as global petroleum prices start to re-bal­ance fol­low­ing the de­ci­sion of oil pro­duc­ing na­tions to cut out­put.

“In­fla­tion will likely clock above 2.0 per­cent in the com­ing months as sug­gested by (Jan­uary) core in­fla­tion of 2.5 per­cent. Ris­ing energy prices will con­trib­ute to higher in­fla­tion,” Fi­nance Un­der­sec­re­tary Gil Bel­tran said in a re­port to Fi­nance Sec­re­tary Car­los Dominguez III.

Bel­tran, who is also the DOF ’s chief econ­o­mist, noted that the World Bank is fore­cast­ing av­er­age world oil prices to rise by 28.5 per­cent to $55 per bar­rel this year, from $42.8 per bar­rel in 2016.

De­spite the pro­jected in­crease in fuel prices, he said the coun­try’s macroe­co­nomic fun­da­men­tals re­main sound as in­fla­tion stays within the tar­geted range.

“This (sound macroe­co­nomic fun­da­men­tals) will pro­vide eco­nomic au­thor­i­ties flex­i­bil­ity to main­tain rapid growth de­spite un­cer­tain­ties in the world econ­omy,” Bel­tran said on Tues­day.

In Jan­uary, in­fla­tion in­creased slightly to 2.7 per­cent, match­ing DOF's in­ter­nal fore­cast and 0.1 per­cent­age point higher than in the pre­vi­ous month, but within the tar­get range of 2.0 per­cent to 4 per­cent ear­lier set by the Bangko Sen­tral ng Pilip­inas (BSP).

The slight in­crease in in­fla­tion was driven mainly by food price in­crease, Bel­tran said, adding that the food group con­trib­uted 1.5 per­cent­age points to the 2.7 per­cent in­fla­tion rate or more than half of the gen­eral price in­crease.

In Jan­uary, trans­port prices rose from De­cem­ber’s 1.9 per­cent to 2.4 per­cent; cloth­ing and footwear jumped from 2.5 per­cent to 2.8 per­cent; hous­ing, util­i­ties and fu­els from 1.3 per­cent to 1.8 per­cent; and recre­ation and cul­ture in­creased from 1.7 per­cent to 1.9 per­cent.

Like­wise, prices for health also slightly moved up from 2.5 per­cent to 2.6 per­cent; and restau­rant and mis­cel­la­neous ser­vices rose from 2.1 per­cent to 2.2 per­cent.

Mean­while, the gen­eral price in­crease for com­mu­ni­ca­tions (0.1 per­cent) and ed­u­ca­tion (1.8 per­cent) re­mained steady in Jan­uary.

In con­trast, prices of food and non-al­co­holic bev­er­ages slowed to 3.4 per­cent from 3.6 per­cent; al­co­holic bev­er­ages and to­bacco con­tracted from 6.3 per­cent to 5.6 per­cent, while fur­nish­ings and house­hold equip­ment fell to 2.3 per­cent from 2.4 per­cent.

Last month, Manila Elec­tric Co. (Mer­alco) rate per kilo­watt hour (kWh) for an av­er­age per-month con­sump­tion of 300 kWh dipped to R8.4 from R8.7 in De­cem­ber and a year ago.

Mer­alco's gen­er­a­tion rate per kWh also fell to R3.7 dur­ing the month from R3.9 in De­cem­ber and in the pre­vi­ous year.

Av­er­age price of ga­so­line also in­creased to R46.6 per liter from R44.8 in De­cem­ber and R38.2 a year be­fore.

As for diesel, its av­er­age price in Metro Manila among the “Big Three” oil com­pa­nies rose to R30.8 per liter from R29.1 in the pre­vi­ous month, which is also higher than the R20.5 reg­is­tered in the same month last year.

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