Inflation hits highest in nearly 2 years

Inflation—or the rate of increase in prices of basic goods and services—rose 2.5 percent year-on-year in November, the fastest in almost two years.

Philippine Statistics Authority (PSA) data released yesterday showed that last November’s headline inflation was the highest since December 2014’s 2.7 percent while matching the similar 2.5-percent increase in February 2015.

Inflation last month was also faster than the 2.3 percent last October as well as 1.1 percent posted in November last year.

In a report, the PSA attributed the increase in the inflation rate in November to “higher annual increments registered in the indices of alcoholic beverages and tobacco; housing, water, electricity, gas, and other fuels, and transport.”

The higher inflation could be attributed to the increase in domestic prices of petroleum products, which comprise the bulk of the nonfood commodity basket usually purchased by the average Filipino household, Socioeconomic Planning Secretary Ernesto M. Pernia explained in a statement.

The National Economic and Development Authority (Neda) said nonfood inflation registered an uptick on the back of higher electricity, housing, gas, transport and water costs.

As for food inflation, Neda said it remained stable as corn prices sustained a four-month downtrend while rice prices declined in November to reverse increases during the five preceding months.

“The decrease in rice prices signals the recovery of the rice sector from the devastation of typhoons ‘Karen’ and ‘Lawin.’ We must foster technological advances in agriculture to decrease the susceptibility of our crops to natural calamities,” Pernia, who is also Neda chief, said.

In a text message to reporters, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. noted that inflation averaged 1.7 percent during the first 11 months, still below the government’s 2-4 percent target range.

“The trend is consistent with our expectation that for 2017 and 2018, full-year inflation would be within target,” Tetangco said. The inflation targets for the next two years were a similar 2 to 4 percent.

“We continue to watch petitions for transport fare adjustments and global developments that may affect domestic inflation dynamics over the policy horizon,” Tetangco added.

For his part, Pernia said he expected the full-year inflation figure to be “well within the government’s inflation target band of 2 to 4 percent.”

“The overall balance of risks is tilted on the upside, with supply-side factors as the main contributor to price adjustments.” Pernia added.