MANILA, Philippines – The holiday season brought the highest level of inflation for 2016, although inflation still fell below the government’s target range for the year.
Data released by the National Economic and Development Authority (NEDA) on Thursday, January 5, showed that inflation in December 2016 rose slightly to 2.6.% from 2.5% in November 2016.
“The uptick in inflation last month was caused by price increases partly due to the holiday season and supply constraints on some food items,” said Socioeconomic Planning Secretary Ernesto Pernia in a statement.
December’s surge means that full-year inflation for 2016 settled at 1.8%, below the government’s target range of 2% to 4%, but higher than the 1.4% of 2015.
Core inflation, which excludes selected volatile food and energy prices, also inched up to 2.5% in December from 2.4% in November. The 2016 full-year core inflation averaged at 1.9%, still lower than the 2% recorded in 2015.
Food inflation for December increased to 3.7% from 3.5% in November and was also higher than the 1.8% in the same period in 2015. The surge, NEDA said, was due to faster increases in the prices of bread and cereals (1.6% from 1.5%), fish (5.5% from 4.7%), and meat (1.8% from 1.5%).
Non-food inflation was led by transportation prices, which jumped to 1.9% in December from 0.5% in November. Recreation and culture prices also increased slightly to 1.7% from 1.6%.
NEDA traced the spike in transport costs to considerable increases in domestic petrol prices such as unleaded gasoline (10% from 3.98%) and diesel (16.04% from 7.41%).
“The higher prices in transport commodity reflected the hike in international oil prices caused by oil-producing countries’ decision to cut oil production by almost 1.8 million barrels per day,” Pernia said.
The government expects inflation to be within the target range of 2% to 4% for both 2017 and 2018, taking into account higher oil prices, pending petitions for adjustments in electricity rates, and especially, strong domestic economic activity.
Pernia warned, however, that damage to crops resulting from typhoons Karen, Lawin, and Nina could lead to faster inflation in early 2017. As a food staple, rice comprises a sizeable portion of the Consumer Price Index basket.
“The volatility in rice prices could affect the overall welfare of Filipino families, particularly the poor who spend around 20% of their incomes on rice. Therefore, the government needs to promote more resilient practices for rice production to minimize the impacts of climate-related shocks,” he said. – Rappler.com