Inflation rate inched up slightly to 3% in January

The Philippines started the new year with a slightly higher inflation due to an increase in food and power prices and the implementation of the “sin tax” law.

Inflation inched up to 3 percent in January from 2.9 percent in December 2012, the National Statistics Office reported yesterday.

While slightly up, the Jan. 2013 inflation rate was still within the Development Budget Coordination Committee’s inflation target of 3 to 5 percent for 2013, according to the National Economic and Development Authority (Neda). It was also lower compared to the 4-percent increase in consumer prices in Jan. 2012.

“The implementation of the new sin tax law, which took effect at the start of the year, significantly raised the price index of alcoholic beverages and tobacco,” Neda Assistant Director General Rosemarie G. Edillon said.

The price of alcoholic beverages rose 6.9 percent while tobacco increased by 28.1 percent last month from a year ago.

Last month also saw higher electricity charges and liquefied petroleum gas (LPG) prices. Manila Electric Co. reported a 6-percent increase in its generation charge due to higher costs from suppliers. LPG prices also rose 3.3 percent year-on-year.

However, cheaper petroleum prices were observed last January.

Core inflation, which excludes selected volatile food and energy prices, climbed 3.6 percent in January from 3.3 percent in the previous month but lower compared to 4.3 percent a year ago.

Headline inflation in Metro Manila eased to 2.4 percent in January from 2.8 percent in December 2012 and 3.5 percent in the same month last year. This was lower than the inflation rate in the provinces of 3.3 percent in January, which was higher than the previous month’s 2.9 percent but slower than 4 percent in January 2012.

Edillon also noted that the overall increase in consumer prices in the Philippines continued to be lower compared to that in Indonesia and Thailand in January. Headline inflation in Indonesia and Thailand registered at 4.57 and 3.39 percent, respectively, during the period.

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Tags: Business , Inflation , sin tax law