Inflation hit 3-year high of 3.2% in 2017

Inflation rose to a three-year high of 3.2 percent in 2017 mainly as the prices of food and utilities as well as transportation costs increased faster, the government reported Friday.

The Philippine Statistics Authority said headline inflation in December rose to 3.3 percent year-on-year, similar to the rate posted in November but higher than the 2.6 percent recorded a year ago.

Amid the Christmas holiday, PSA data showed that prices of alcoholic beverages and tobacco rose 6.4 percent year-on-year last month; food and non-alcoholic beverages, up 3.5 percent; restaurant and miscellaneous goods and services, up 3 percent, and furnishing, household equipment and routine house maintenance, up 1.9 percent.

For the entire 2017, the average rate of increase in prices of basic goods was up from 1.8 percent in 2016 and the record-low 1.4 percent in 2015.

The low inflation rates in the two preceding years, which fell below the government’s yearly target range of 2-4 percent, reflected the impact of the sharp drop in global oil prices during the period.

As the price of oil normalized worldwide, domestic prices of housing, water, electricity, gas and other fuels increased by 3.2 percent in 2017, reversing the 0.2-percent decline in 2016, PSA data showed.

The PSA said six other commodity groups also registered faster price increases last year—alcoholic beverages and tobacco (6.2 percent); food and non-alcoholic beverages (3.7 percent); transport (3.3 percent); restaurant and miscellaneous goods and services (2.2 percent); furnishing, household equipment and routine maintenance of the house (2.1 percent), and communication (0.2 percent).

The food index rose 3.7 percent in December and increased by a faster 3.8 percent for the full-year 2017, higher than 2016’s 2.6 percent.

Last year, fish prices jumped by a tenth; corn, up 7.2 percent; meat, up 5.9 percent; fruits, up 4.2 percent; other cereals, flour, cereal preparation, bread, pasta and other bakery products, up 1.9 percent, and rice, up 1.1 percent.

Despite the pick up in consumer prices, the state planning agency National Economic Development Authority noted that the average inflation rate in 2017 was well within the 2-4 percent target.

“We see inflation over the near-term to remain stable despite pressures that may be brought about by the newly enacted TRAIN program, weather patterns, and uncertainties in international oil markets,” said Socioeconomic Planning Secretary Ernesto M. Pernia, referring to the Tax Reform for Acceleration and Inclusion Act.

Also, “any increases in prices in the first few months of 2018 will be tempered by the expected decline in power rates as capacity fees from power generators fall due to fewer power outages,” the Neda chief said. “The timely implementation of the ’Build, Build, Build’ program will also be critical in bringing down electricity and transportation costs over the medium term.”