The Finance Department said higher prices of sin products, especially tobacco, will continue to cause a spike in inflation rate in the near term.
The agency, citing available data, said the uptick in March inflation to 4.3 percent from the revised 3.8 percent in February could be traced to higher prices of the so-called sin products.
“As expected, the inflationary pressure came largely from elevated food prices [e.g., rice, fish and vegetables] due to absence of NFA [National Food Authority] rice, rough seas limiting fish supply, and bad weather affecting vegetables, respectively. Continuing higher prices of non-alcoholic beverages due to TRAIN and sin products due to sin tax adjustment likewise pushed up inflation pace,” the department said.
“Appropriate adjustments in prices of sin products, tobacco specifically, will continue to fuel inflationary momentum in the near term,” it said.
It said the government was in fact discouraging the consumption of these products through higher prices, among others.
The March inflation breached the upper limit of the target band of 2 percent to 4 percent for the year. It was also significantly faster than 3.1 percent a year ago. This brought the first three months’ average to 3.8 percent, still below the target range.