Tax hikes increase price burden on poor families in January

MANILA, Philippines — Tax hikes implemented at the start of the year jacked up prices of food, oil and “sin” products, resulting in a six-month high inflation rate among poor families in January.

The Philippine Statistics Authority’s (PSA) report on the consumer price index (CPI) for bottom 30-percent income households in January released Thursday showed that the rate of increase in prices of basic commodities rose 2.3 percent year-on-year that month, the highest since July last year’s 2.7 percent.

The PSA said prices of food and non-alcoholic beverages, which weighed heavily in the CPI, inched up 0.7 percent last January.

National Statistician Claire Dennis S. Mapa earlier explained that prices of beef, chicken, fish, and vegetables rose last month as a result of the eruption of Taal Volcano, which affected farms in the Calabarzon region.

Prices of alcoholic drinks and tobacco products, meanwhile, climbed 22.4 percent year-on-year in January.

Excise taxes slapped on sin products such as cigarettes, e-cigarettes and alcohol further increased as two laws—Republic Act No. 11346 and RA 11467—jacked up rates effective Jan. 1.
Mapa had said cigarettes and alcoholic beverages accounted for 2.4 percent of the CPI basket among bottom 30-percent income households—a bigger share than the 1.6 percent for overall national headline inflation.

Also, transport costs increased by 3.5 percent year-on-year, while prices of housing, water, electricity, gas, and other fuels rose 2.7 percent last month.

The third tranche of oil excise tax hike under the Tax Reform for Acceleration and Inclusion (TRAIN) Act also took effect last Jan. 1.

The TRAIN Law slapped a higher levy on consumption to compensate for the lower and restructured personal income tax rates.

The other commodity groups that jacked up inflation among poor families at the start of the year included education (up 5.2 percent year-on-year); recreation and culture (up 2.9 percent); and communication (up 0.4 percent).

The cost of availing restaurant and miscellaneous goods and services rose 2.6 percent last month, but a slower pace than the increment in December.

The food alone index increased by a faster 0.6 percent year-on-year in January from 0.1 percent last December, as most commodities posted price hikes save for rice (down 6.5 percent year-on-year), corn (down 2.6 percent), as well as sugar, jam, honey, chocolate and confectionery (down 3.3 percent).

Retail prices of rice were declining since May last year amid liberalized importation of the Filipino staple food under the Rice Tariffication Law.

Starting this year, the PSA’s monthly CPI for bottom 30-percent households report was rebased to the year 2012 from 2000 previously.

Edited by MUF