Inflation hits 22-mo high

Higher food prices and expensive transportation options made Filipinos shell out more money to spend during the Christmas holidays, pushing headline inflation to a 22-month high of 3.5 percent year-on-year in December last year.

The poor suffered worse —inflation among the bottom 30-percent income households climbed to a nearly two-year high of 4.3 percent last month, the Philippine Statistics Authority (PSA) reported on Tuesday.

Amid a pandemic-induced recession, the average inflation rate in 2020 inched up to 2.6 percent from 2.5 percent in 2019, within the government’s target range of 2 to 4 percent.

Inflation nonetheless breached 3 percent or the midpoint of the target band during the last two months of 2020 as a string of strong typhoons damaged agricultural production while an uptick in demand caused by the holiday season made goods and services more expensive.

Among food items, fish, meat, rice and vegetables posted faster price increases in December due to the combination of supply constraints—in the case of pork, due to the African swine fever scare—and bigger demand, National Statistician Claire Dennis Mapa said.

Meantime, the 0.1-percent nationwide inflation in December ended 19 straight months of deflation since May last year when the Rice Tariffication Law liberalizing importation of the Filipino staple food took effect.

Rice prices outside Metro Manila remained lower year-on-year but those for rice varieties available in the National Capital Region (NCR) rose in recent months, Mapa said.

Amid prolonged quarantine restrictions that left only a few transport options, the cost to ride tricycles increased by 47.2 percent year-on-year while jeepney fare rose 6.6 percent last month, both faster than in November.

The gradual reopening of the economy also pushed the cost of restaurant and miscellaneous goods and services—including meals, articles for personal hygiene and barbershop services—by 2.4 percent in December from 1.9 percent in November.

Among the poor, the same items in the consumer price index (CPI) basket impacted on their higher inflation rate —food and non-alcoholic beverages, transport as well as restaurant and miscellaneous goods and services.

At a time when indigent families lost jobs or had more difficult times due to the COVID-19 pandemic, the average inflation among the bottom 30-percent households in 2020 reached 2.9 percent, higher than 2019’s 2.4 percent.

In a statement, Acting Socioeconomic Planning Secretary Karl Kendrick Chua said that “even with the low-inflation environment, there is still a need to improve supply-chain efficiency to ensure that prices of essential goods and services remain stable.”

As such, Chua, who heads the state planning agency National Economic and Development Authority, urged establishing processing facilities to prevent spoilage and wastage of farm harvests, putting up cold storage facilities, postharvest centers and warehouses for agricultural products, as well as promoting online marketplaces to ease logistics bottlenecks. INQ