Inflation rate likely accelerated to 1.5 percent in December from 1.1 percent in November, driven by the impact of typhoon Lando and holiday-related spending, the Finance Department said Monday.
Finance Undersecretary Gil Beltran said in an internal economic bulletin headline inflation in December would be 0.4-percentage-point higher than 1.1 percent in November, but would be still slower than 2.7 percent in December 2014.
“Food is adversely affected by typhoon Lando and holiday-related demand upsurge… lagged effect of fuel prices, and alcoholic beverages, recreation and culture due to the holiday demand,” Beltran said.
He said the biggest contributors to the increase relative to November were transport, alcoholic beverages and tobacco, which were likely up by 0.7 percentage point.
Beltran said transport inflation rate likely increased to 1.3 percent from 0.6 percent in the previous month while inflation for alcoholic beverages and tobacco would surge to 4.6 percent in December from 3.9 percent in November.
The food commodity group inflation is also expected to increase from 1.7 percent in November to 2 percent in December while recreation and culture inflation would slightly inch up to 1.2 percent from 1 percent in November.
Prices of electricity also increased in December to P8.92 per kilowatt-hour for 300-kWh monthly consumption.
Beltran said inflation was normalizing from the dampening impact of oil prices. He said WTI crude oil price would likely fall to $42 per barrel from the current price of $42.44 a barrel.
“The recovery of food supply is very important after a strong typhoon,” he said.
He also said the government should encourage and develop private sector sources of seeds and seedlings and look into alternative ways of replenishing lost stocks through imports.
Standard Chartered Bank economist Jeff Ng, for his part, said inflation likely rose to 1.4 percent in December.
“We expect headline inflation to increase again to 1.4 percent year-on-year from 1.1 percent in November, making December the second consecutive month of increases,” Ng said.
“November inflation increased at a higher-than-expected pace, but we believe the effect was temporary as rice inflation remains stable. Food inflation may remain elevated near-term due to the typhoon’s impact on vegetable and fish items,” he said.
Ng said inflation in the first six months of 2016 would climb to 2 percent as the base effects faded. “We forecast inflation of 2.2 percent in 2016, versus 1.3 percent in 2015,” he said.