Inflation slowed to 4.4%, but food prices up in NCR in January

AFP

MANILA, Philippines–Inflation rose 4.4 percent year-on-year in January, the slowest in 10 months, partly as the full impact of the second round of oil excise tax increase under the Tax Reform for Acceleration and Inclusion (TRAIN) Act was not yet felt at the start of the year.

The rate of increase in prices of basic commodities was the lowest since March last year’s 4.3 percent, but still above the government’s target range of 2-4 percent.

The January rate was also higher than the 3.4 percent a year ago.

As consumer prices ease, the government expects headline inflation to return within target after it averaged a 10-year high of 5.2 percent last year.

National Statistician Lisa Grace S. Bersales told a press conference that the following commodity groups posted slower price increases year-on-year: food and non-alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity, gas and other fuels; health; as well as transport.

“The slowdown of inflation in January 2019 was mainly driven by the deceleration in the annual increments of food and non-alcoholic beverages, alcoholic beverages and tobacco, and transport,” Bersales explained.

To recall, the TRAIN Law in January last year jacked up the excise tax slapped on cigarettes, followed by another round in July, hence the elevated tobacco prices in 2018.

But Bersales said average prices in January inched up 0.1 percent compared to prices last December.

Bersales said prices increased month-on-month as the cost of housing, water, electricity, gas and other fuels went up 0.2 percent, reversing the 0.1-percent decline in December.

She nonetheless said the month-on-month rise in prices “may not yet include the full effect of [higher fuel] excise taxes in TRAIN.”

Under the TRAIN Law, the excise tax slapped on diesel and bunker fuel further rose to P4.50 in January 2019, while the levy on gasoline increased to P9 this year.

But the Department of Energy (DOE) had ordered oil companies to first use up all inventories that spilled over from last year and apply the new excise tax rates on fresh supplies.

The increases in prices of furnishing, household equipment and routine maintenance of the house, as well as restaurant and miscellaneous goods and services, both at 0.3 percent in January, were also faster than the 0.2 percent and 0.1 percent, respectively, a month ago.

Bersales also noted of a 0.9-percent month-on-month increase in prices of food and non-alcoholic beverages in Metro Manila last January, a reversal of the 0.6-percent decline in December.

She said “the usual culprits”—rice, meat, fish and vegetables—posted higher prices last month compared to the previous month.