Expensive food lifted inflation to 26-month high of 4.7% in February

MANILA, Philippines – Inflation climbed to a 26-month high of 4.7 percent year-on-year in February as food costs, especially of meat and fish, remained elevated even as pork prices eased in Metro Manila due to the ongoing price cap to the detriment of consumers elsewhere in the country who shouldered more expensive products.

The rate of increase in prices of basic commodities last month was the highest since the 5.1 percent recorded in December 2018, Philippine Statistics Authority (PSA) data released Friday showed. During the first two months, headline inflation averaged 4.5 percent, above the 2-4 percent target range.

Among the poor belonging to the bottom 30-percent income households, inflation was a faster 5.5 percent last February, also the highest in 26 months, so they had to shell out more to buy basic goods and avail of consumer services despite the harder times wrought by the COVID-19 pandemic.

National statistician Dennis Mapa told a press conference that expensive food and higher oil, transport and utility costs contributed to February’s inflation uptick.
In particular, meat prices rose by a faster 20.7 percent compared to a year ago levels nationwide, compared to the 17.1-percent increase in January.

In Metro Manila, meat price increases slowed a bit to 20.4 percent year-on-year from January’s 21.6 percent, as the 60-day price ceiling imposed by President Duterte on pork and chicken took effect last month.

On the other hand, meat prices jumped by a higher 20.8 percent year-on-year outside Metro Manila compared to the 15.9-percent climb last January.

Comparing prices month-on-month, Mapa said pure pork meat was sold at an average of P323 per kilo in Metro Manila last month, down from P368 a kilo in January. However, prices outside Metro Manila rose to P317 per kilo from P300 a month ago.

For meat with bones, prices in Metro Manila eased to P300 per kilo in February from P338 during the previous month, even as it became more expensive in the provinces—sold at P281 a kilo from P264 in January, Mapa said.

Nationwide, fish prices rose 5.1 percent year-on-year on average, higher than January’s 3.7 percent, mainly due to faster hikes in areas outside Metro Manila.

As for rice, the 0.5-percent nationwide inflation was mostly due to the 2.9-percent increase in prices in Metro Manila and 0.2-percent increment outside Metro Manila which reversed the deflation in January, PSA data showed.

On a month-on-month basis, price hikes among food and non-alcoholic beverages actually eased to 0.4 percent in February from January’s 1.5 percent.

In Metro Manila, prices of food and beverages posted deflation as they declined by 1.1 percent compared to January levels. Meanwhile, food inflation in the rest of the country slowed to 0.7 percent month-on-month from January’s 1.4 percent.

Mapa said normalizing prices of petroleum products also pushed up prices in seven out of the 11 major commodity groups which the PSA tracked for the consumer price index (CPI). To recall, petroleum prices fell last year due to low global demand amid the pandemic-induced recession and lockdowns which stopped international travel and trade.

In a report, RCBC chief economist Michael Ricafort said that in the coming months, “much lower inflation denominator/base effects would also mathematically lead to higher year-on-year headline inflation locally, even into 5-percent levels, as well as worldwide, in view of the anniversary of the COVID-19 lockdowns (starting March to April 2020) that sharply reduced demand.”

On the flip side, “the expected easing of La Niña/storms, with the onset of the summer season, as well as new planting/harvests in the coming weeks/months would help add to local food supply and help ease some prices of food/crops especially vegetables and other agricultural products, after the series of storms since November 2020; thereby would somewhat help ease headline inflation, as an offsetting factor,” Ricafort said.

ac