PH’s 2012 inflation slows to 3.2%

No surprise there, say economists, citing strong peso as a factor



The average inflation in 2012 slowed to 3.2 percent, from the 4.6 percent recorded in the previous year, hitting the low end of the Bangko Sentral ng Pilipinas’ target range of 3 to 5 percent, the National Statistics Office (NSO) said Friday.

Also, the rate of increase in consumer prices accelerated to 2.9 percent in December, from the previous month’s 2.8 percent, on higher food, beverage and tobacco prices, the NSO reported.

Despite reports that some consumers have been stocking up on tobacco ahead of the anticipated tax hikes starting this year, the low-weighted tobacco and alcoholic beverages index hardly seemed to push consumer prices, official said.

The 3.2 percent inflation was also the lowest since 2007, when the rate slowed to 2.9 percent due to the global financial crisis.

Core inflation, which excludes food items and fuel because of their volatile nature, eased to 3.3 percent in December from 3.4 percent in November.

The annual average core inflation also slowed to 3.7 percent in 2012 from the 4.3 percent recorded the previous.

Economists as well as retailers said the figures were not surprising given enough commodity supplies in the Philippines and a strong peso.

“This suggests that inflation is not the problem, rather, it’s still a sustained strong growth. The strong peso is the biggest contributor to the mild inflation,” Benjamin E. Diokno of the UP School of Economics said in text message.

This year, Diokno said, price risks could come from oil prices and “more damaging than usual” natural calamities, which might exert greater pressure on food prices.

Food takes up the bulk of household budgets. Due to the higher taxes imposed on the prices of cigarettes and alcoholic beverages, these items may contribute to inflation “to a limited extent,” the economist added.

Also, wages are not expected to drive up inflation because of large surplus labor, he said.

“Inflation will continue to be low as long as the peso remains strong and oil prices won’t rise wildly,” Cid L. Terosa of the University of Asia and the Pacific said in a text message.

Retailers said prices had been “tame” for the last few years because of tight competition and consumer sensitivity, which kept prices stable.

“Consumer prices did not move much. This will be the case for the first semester, at least if there will be no major increase in input costs. Retail prices have remained stable because of the stiffer competition among retailers both in the formal and informal sectors and a consumer market that has exhibited a preference for shopping in lower price retail outlets,” Philippine Association of Supermarkets Inc. president Carlos V. Cabochan said in a text message.

Philippine Amalgamated Supermarkets Association Inc. president Steven T. Cua also said stable inflation in 2012 would be good for consumers since it preserves their ability to buy goods and services.

Businesses may also benefit, he added, as benign inflation may encourage the financial sector to keep interest rates low to keep the cost of money low while it sustains the expansion of various industries.

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  • lagalag

    Ang mga pinoy talaga puro NEGA,dapat matuwa tayo kasi low inflation,mag sumikap kasi para wala masabi,puro kayo reklamo.

  • Hayek_sa_Maynila

    the strong peso is not the only reason for manageable inflation for PHL in 2012. Its also weakness in global demand, which is a source of uncertainty. If so, monetary action should be expansionary as softness in external demand needs to be outweighed by domestic investments and consumption.

    To sustain low inflation, however, the PHL must learn from Thailand and Malaysia. By keeping a competitive exchange rate in the 1980 and the first half of the 1990s, the weak THB and MYR allowed them to improve agri productivity, helping keep inflation close to 3.0% or lower. Now the PHL must learn from this…that a weak currency is not bad for inflation but good for inflation bec it is good for agri productivity.

    What Dr. Terosa said its dangerous…it might tempt the BSP to keep PHP strong to lower inflation… Yes it will, temporarily but quite paradoxically a weak currency, because it helps improve agri productivity (and make imports more expensive and encourages more FDI), will actually help ensure that inflation in the medium term remains low…

  • bobong_urHonor_at_DonDee

    The reason inflation slowed down…. DAHIL SOBRANG MATAAS NA ANG PRESYO NG BILIHIN – wala na – kahit dugo wala ng makuha sa patatas.

    • Paliwaweng

      inflation slowed down dahil sa sobrang taas ng bilihin?
      Ang inflation ay hindi timbang napagtaas ng halaga ng bilihin kumpara sa purchasing power ng piso.
      Kung tumataas ang bilihin at kokonte ang namimili, di ito nangangahulugan na bababa ang inflation rate.

      • bobong_urHonor_at_DonDee

        Filipinos really don’t understand satire.

  • Borogol

    kung 3.2% lang inflation, bat ang laki ng itinaas ng mga price ng food. you dont need to look elsewhere, check jolibee/mcdo..

  • Weder-Weder Lang

    Sana naman makatikim din tayong deflation. Para mas malaki ang mabibili ng pera natin. Para astig.

    • Diablo_III

      Kung may deflation bro, it means wala ng bumibili at walang pera ang mga tao.. lol. 

    • Weya Sago

      check your economics, deflation is indication of an economic rescession

  • Weya Sago

    this is great news… we have a low inflation rate environment and high economic growth, I hope we can sustain this in the short to medium term

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