The spread of novel coronavirus (nCoV) may keep oil prices low as global demand for the commodity slides amid travel bans to and from China that would slow tourism, the Department of Finance (DOF) said on Thursday (Feb. 6).
In a bulletin, Finance Undersecretary Gil Beltran, the DOF’s chief economist, said “the downtrend in crude oil prices starting January could slow down inflation going forward.”
“Lower global economic growth due to the coronavirus outbreak will also reduce petroleum demand and thus, dampen inflationary pressures,” Beltran added.
In a Feb. 1 report, UK-based Oxford Economics said the recent “drop in the oil price caused by lower fuel demand for travel and transportation is also a clear demonstration of the significant disruption’ caused by the nCoV outbreak.”
In the Philippines, the increase in inflation last January to an eight-month high of 2.9 percent was attributed mainly to faster increases in transport costs and gasoline prices. Also factored in were higher taxes on alcohol, cigarettes and vapes.
The third tranche of new taxes on oil under the Tax Reform for Acceleration and Inclusion (TRAIN) Act took effect last Jan. 1 alongside two new laws that pushed sin taxes up.
The higher rate of increase in prices of basic commodities last month was also partly a result of the eruption of Taal Volcano, which disrupted supply from farms in the Calabarzon region and pushed up prices of beef, chicken, fish and vegetables.
In his bulletin, Beltran said the inflation increase last January “could be traced to food and nonfood items alike.”
Increases in costs of meat, fish and vegetables added 1.09 percent to the inflation rate, said Beltran.
Only prices of rice remained low, having tempering effect on inflation.
“Food supply needs to be scaled up to reduce inflationary pressure,” said Beltran.
He said Finance Secretary Carlos G. Dominguez III and Agriculture Secretary William Dar had spoken over the phone and agreed there was a need to boost food supply to tame inflation.