The country’s inflation rate likely breached 4 percent in December 2013 on lingering food price pressures in the aftermath of Supertyphoon Yolanda, American banking giant Citigroup said.
This suggests that consumer prices may have risen at the fastest pace in two years. The last time the country’s inflation rate reached 4 percent was in January 2012.
The government is expected to release the December 2013 inflation rate figure on Jan. 7.
“Lingering food price pressures arising from the local food supply disruption brought about by the strong typhoon in November would probably account for headline inflation probing 4 percent year-on-year in December,” Jun Trinidad, Citi economist for the Philippines, said in a research note dated Jan. 3.
Trinidad estimated food inflation at 4.7 percent in December, rising from 3.9 percent in November.
He said this likely arose from one-off spikes in the consumer price index (CPI) for rice, fish, fruits and vegetables, as CPI in the affected regions probably contributed to the faster pace of food CPI.
“On the other hand, nonfood CPI probably edged up to 2.2 percent year-on-year in December with the controversial electricity tariff rate adjustments probably making the largest contribution,” Trinidad said.
“The electricity generation cost of Meralco (electricity provider in Metro Manila) that rose by over 60 percent year-on-year could contribute a potential 0.29-percentage point to headline inflation since CPI weight of electricity, gas and other cooking fuel for Metro Manila is limited to 1.8 percent,” Trinidad said.
“Any contagion price risk would be reflected by CPI in succeeding months,” the economist added.
Meanwhile, Trinidad also expects the CPI of tobacco and alcoholic beverage (30 percent year-on-year), education (4.7 percent YoY), restaurant & services (2.3 percent YoY) and CPI rental (1.9 percent YoY) to have sustained a faster rate for nonfood CPI.
From January to November last year, the country’s inflation rate averaged at 2.8 percent.
For November alone, the country’s headline inflation accelerated to 3.3 percent in November from 2.9 percent in October.
This was attributed to a faster pace of increase in the CPI for food and non-alcoholic beverages; housing, water, electricity, gas and other fuels; furnishing, household equipment and routine maintenance of the house; and transport compared to their October rates.
Excluding selected food and energy items, core inflation advanced to 2.8 percent in November from 2.5 percent in October.