Inflation hit new over 5-year high of 5.2% in June

Inflation jumped by 5.2 percent year-on-year in June, a new over five-year high, due to sustained elevated prices of food and “sin” products, the government reported Thursday.

In a report, the Philippine Statistics Authority (PSA) said the faster inflation last month was “primarily brought about by higher annual rate posted in the heavily-weighted food and non-alcoholic beverages index at 6.1 percent.”

In particular, prices of alcoholic beverages and tobacco climbed 20.8 percent in June; housing, water, electricity, gas, and other fuels, up 4.6 percent; furnishing, household equipment and routine maintenance of the house, up 3 percent; transport, up 7.1 percent; communication, up 0.4 percent; and education, up 4 percent, the PSA data showed.

Under the Tax Reform for Acceleration and Inclusion (TRAIN) Act, the unitary excise tax slapped on cigarettes rose to P32.50 per pack effective January 1 from P30 a pack last year.

Also, the excise tax rates slapped on alcoholic drinks go up every year under the Sin Tax Reform Law of 2012.

Starting July, the unitary excise tax slapped on cigarettes will further rise to P35 per pack, as mandated under the TRAIN Law.

Improved tax compliance by Mighty products, now owned by Japan Tobacco International, had also been blamed by the DOF for pushing cigarette prices higher, as correct tax payments elevated the brand’s retail prices.

The food alone index rose 5.8 percent in June, due to the prices increases in rice (up 4.7 percent); corn (up 14.1 percent); other cereals, flour, cereal preparation, bread, pasta and other bakery products (up 2.4 percent); meat (up 5 percent); vegetables (up 8.6 percent); sugar, jam, honey, chocolate and confectionery (up 3.9 percent); and other food products (up 3.1 percent).

At the end of the first half of 2018, headline inflation averaged 4.3 percent, beyond the government’s 2-4 percent target range.

Headline inflation in the National Capital Region jumped by a faster 5.8 percent from 4.9 percent in May, while the rate outside Metro Manila climbed to 5.1 percent from 4.6 percent in the previous month.

Last Monday, economic managers conceded that inflation would likely breach the target for 2018 as they adopted the Bangko Sentral ng Pilipinas’ forecast of 4-4.5 percent for the entire year.

While keeping the 2-4 percent inflation target for the period 2018-2020, the Cabinet-level Development Budget Coordination Committee (DBCC) jacked up their projected rate of increase in prices of basic goods for this year from the earlier forecast of 2-4 percent during their previous meeting in April.

For the period 2019-2022, the yearly inflation forecasts were kept at 2-4 percent.  /kga