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January inflation slowest in 10 mos

Rate still higher than year ago but closer to government target range of 2-4 percent
By: - Reporter / @bendeveraINQ
/ 05:30 AM February 06, 2019

The inflation rate rose to 4.4 percent year-on-year in January, which was the lowest in 10 months given that the full impact of the second round of oil excise tax hike under the government’s tax reform program was not yet fully felt at the start of the year.

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

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The rate in January last year was 3.4 percent.

As consumer prices ease, the government expects headline inflation to return within target after averaging 5.2 percent last year, the highest in 10 years.

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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, and transport.

Presidential spokesperson Salvador Panelo said the Palace was happy with the slowing inflation since November last year.

“With inflation tapering to a 10-month low, this administration will oversee and ensure that its consequent effects at the market would be felt by the ordinary consumers,” he added.

Critics of the Duterte administration, however, were not impressed with the number, comparing the situation to “waters that only appeared calm on the surface.”

“The drop in the inflation rate to 4.4 percent in January is like calm waters but not calm sailing,” Akbayan Rep. Tom Villarin said.

“It only means less money  in circulation as a post-Christmas effect on spending. It has not taken into account the new round of increases in excise taxes on fuel and rising global prices of oil,” he said in a statement.

“While inflation is slowing in general, inflation for the bottom 30 percent of Filipino households has not eased recording a high 7.2 percent in December,” he said.

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Gabriela representatives Arlene Brosas and Emmi de Jesus said the January inflation “reflects only a temporary deceleration of price increases in basic goods and services. It should not be mistaken for lower prices, as prices of food, fuel and transportation remain high.”

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

The Tax Reform for Acceleration and Inclusion (TRAIN) Law in January last year jacked up the excise tax 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 from prices in December.

Bersales said prices rose 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, excise taxes on diesel and bunker fuel further rose to P4.50 in January 2019, while that on gasoline increased to P9 .

The Department of Energy had ordered oil firms to first use up all old inventories before applying the new rates. This helped in delay the impact of the excise tax hike on prices.

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 a 0.9-percent month-on-month rise in prices of food and non-alcoholic beverages in Metro Manila in January, a reversal of the 0.6-percent decline in December. —WITH  REPORTS FROM DJ YAP AND JULIE M. AURELIO

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TAGS: inflation rate, January inflation, oil excise tax hike, tax reform program
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