Maybank: Inflation to hit 3.9-4% by mid-2018 due to TRAIN law

Inflation likely rose at a faster pace of 3.5 percent year-on-year in January mainly due to the impact on consumer prices of the higher excise taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) act, Maybank Group said Monday.

Maybank Investment Bank group chief economist Suhaimi Ilias’ headline inflation forecast was higher than the 2.7 percent posted in January last year as well as the 3.3 percent in December.

At 3.5 percent, it will be the fastest rate of increase in prices of basic goods since November 2017.

The government will release the January headline inflation figure on Tuesday, ahead of the first meeting on the monetary policy stance for 2018 of the Bangko Sentral ng Pilipinas’ policymaking Monetary Board on Thursday.

“The TRAIN is expected to push up the CPI [consumer price index] in 2018 to 3.6 percent from 3.2 percent in 2017,” Ilias told the Inquirer in an e-mail.

“We project the impact to peak in mid-2018 to around 3.9-4 percent year-on-year as consumers receive both the direct and indirect impact from TRAIN implementation,” Ilias added.

The TRAIN Law starting Jan. 1 jacked up or slapped new excise taxes on oil, cigarettes, sugary drinks and vehicles, among other goods, to compensate for the restructured personal income tax regime that raised the tax-exempt cap to an annual salary of P250,000. —BEN O. DE VERA