Inflation rate accelerated to 2.7 percent in January 2017, the fastest increase in consumer prices in two years, on the back of higher fuel and transport costs, the Philippine Statistics Authority said Tuesday.
Data from PSA showed the inflation rate in January was faster than 2.6 percent in December 2016 and 1.3 percent a year ago. It was also the fastest increase in prices in two years, or since December 2014 when inflation rate reached 2.7 percent.
The National Economic and Development Authority said higher price adjustments in the heavily-weighted housing, water, electricity, gas and other fuels pushed up overall inflation. Prices of these non-food items went up by 1.8 percent in January 2017, faster than 1.3 percent in December 2016.
“The faster spike in transport and gas and other fuels costs can be traced to the increase in petroleum prices as the oil market rebalances after the recent decision of the Organization of the Petroleum Exporting Countries to cut oil production by 1.2 million barrels per day,” said Economic Planning Secretary Ernesto Pernia.
Neda said despite the slight pickup in inflation, lower food prices were recorded in January 2017. The food subgroup inflation decelerated to 3.4 percent from the previous month’s 3.6 percent.
Neda said upward pressures on inflation remained, including higher oil prices, pending petitions for higher electricity rates and transport fares and strong domestic demand.
Other price pressures are the shift to a unitary excise rate for cigarettes effective January 2017 under the Sin Tax Reform Law and the Malampaya natural gas field’s 20-day maintenance shutdown that could lead to an increase in the generation charges starting March.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said inflation in January was still within the forecast range of 2.3 percent to 3.2 percent and the government’s target of 2 percent to 4 percent.
“[It is] consistent with our expectation that inflation will follow a slow path to within the target range. We are closely monitoring developments, including the emerging form and magnitude of the tax reform program as well as those from the external front, and their impact on our own price and growth dynamics. We will consider these at our policy meeting this week,” Tetangco said in a text message.
Compared with other Southeast Asian countries, the Philippines’ inflation in January was lower than Indonesia’s 3.5 percent but higher than Thailand’s 1.6 percent.
“We are closely monitoring developments, including the emerging form and magnitude of the tax reform program as well as those from the external front, and their impact on our own price and growth dynamics. We will consider these at our policy meeting this week,” Tetangco said.
Bangko Sentral Deputy Governor Diwa Guinigundo said the latest round of jeepney fare hike approved by the Land Transportation Franchising and Regulatory Board would have a minimal impact on inflation going forward.
Guinigundo said Bangko Sentral was expecting the fare adjustments and took them into consideration in the past meetings before they came out with the projection of a 2 percent to 4 percent inflation target this year and next.
Inflation rate averaged 1.8 percent in 2016, higher than 1.4 percent in 2015.