MANILA, Philippines – Contrary to government officials’ and economists’ expectations, the Philippines’ inflation rate spiked to 8.7% in January 2023 instead of slowing down.

The Philippine Statistics Authority reported on Tuesday, February 7, that the January figure is the highest since November 2008’s 9.1%.

It is also nearly triple the 3% posted in January 2022, showing just how high prices have gone up in a year.

Finance Secretary Benjamin Diokno earlier told reporters inflation likely peaked in December 2022, when it climbed to a 14-year high of 8.1%.

National Statistician Dennis Mapa said the inflation uptrend was mainly driven by expenses related to housing, water, electricity, gas, and other fuels, which went up to 8.5% from 7%.

Prices of food and non-alcoholic beverages inched up to 10.7% from 10.2%. Restaurants and accommodation services posted an inflation rate of 7.6% from 7%.

Main sources of inflation of January 2023 inflation: pic.twitter.com/W3kkNhjrGU

— Ralf Rivas (@RalfRivas) February 7, 2023

Regions, poorest households

Inflation in the National Capital Region (NCR) was slightly lower than the national average at 8.6%.

Areas outside NCR had an average inflation rate of 8.7%. Western Visayas posted the highest rate at 10.3%, while Eastern Visayas had the lowest at 6.9%.

Western Visayas posts highest inflation rate at 10.3%, Eastern Visayas w/ lowest rate at 6.9%. pic.twitter.com/WGFtOcP5Mv

— Ralf Rivas (@RalfRivas) February 7, 2023

Meanwhile, inflation for the bottom 30% income households went up to 9.7% in January, higher than December 2022’s 9.4%, indicating that the poorest members of Philippine society were hit hardest by surging prices.

In a statement, the National Economic and Development Authority (NEDA) said improving agricultural productivity, food supply augmentation, and energy security are the government’s top priorities to temper upward price pressures.

“As part of the administration’s eight-point agenda and the Philippine Development Plan 2023-2028, the government is implementing measures to ease price pressures and cushion the impact of inflation, especially on basic commodities,” NEDA Secretary Arsenio Balisacan said.

April Lee-Tan, head of research of COL Financial, said on Twitter that the surprise January print “will make it difficult” for the Bangko Sentral ng Pilipinas (BSP) “to justify not raising rates as inflation has not yet peaked.”

NEDA said the effect of the BSP’s interest rate hikes is expected to be felt this year.

The central bank previously estimated January inflation would be in the 7.5%-8.3% range.

The government’s economic managers aim for inflation to settle between 2.5% and 4.5% in 2023.

To anchor inflation, the Marcos administration has extended the temporary tariff cuts on pork, rice, corn, and coal, which would in effect augment supply. – Rappler.com