January inflation hits highest in more than two years

Inflation in January rose to its fastest pace in more than two years on the back of higher prices of oil and so-called “sin” products at the start of the year, the government reported Tuesday.

The latest Philippine Statistics Authority data showed that headline inflation peaked at 2.7 percent last month, the fastest since November 2014’s 3.7 percent and matching the rate in December 2014.

In a statement, Socioeconomic Planning Secretary Ernesto M. Pernia attributed the high inflation rate to increased prices of non-food items such as housing, water, as well as electricity, gas and other fuels last January.

“The faster spike in transport and gas and other fuels costs can be traced to the increase in petroleum prices as the oil market rebalances after the recent decision of the Organization of the Petroleum Exporting Countries to cut oil production by 1.2 million barrels a day,” explained Pernia, who also heads the state planning agency National Economic and Development Authority.

According to Pernia, other price pressures were the shift to a unitary excise rate for cigarettes effective January 2017 as mandated by the Sin Tax Reform Law and the Malampaya’s 20-day maintenance shutdown that started last month, which could lead to an increase in the generation charge starting March.

The government targets inflation to stay within 2-4 percent this year, with the Bangko Sentral ng Pilipinas expecting a 3.3-percent rise by yearend. Last year, inflation averaged 1.8 percent, below-target for the second straight year. The BSP expects the P1 increase in basic fare to impact minimally on inflation. —BEN O. DE VERA