December inflation up slightly

January 6, 2017

Philippine inflation rose 2.6 percent in December due to seasonality and some tightness in supply of specific good items.

Inflation in November was 2.5 percent, the Philippine Statistics Authority said Thursday.

“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.

Full-year 2016 inflation is 1.8 percent, below the government’s range of 2.0 to 4.0 percent for the year, but higher than the 1.4 percent of 2015.

Food inflation increased to 3.7 percent from 3.5 percent in the previous month, and higher than the 1.8 percent in the same period in 2015. Faster increases in the prices of bread and cereals (1.6 percent from 1.5 percent), fish (5.5 percent from 4.7 percent), and meat (1.8 percent from 1.5 percent) were recorded, the National Economic and Development Authority (NEDA) said.

Non-food inflation was pushed by transport (1.9 percent from 0.5 percent in November) and recreation and culture (1.7 percent from 1.6 percent in November). Rise in transport costs can be traced to increases in domestic petrol prices such as unleaded gasoline (10 percent from 3.98 percent) and diesel (16.04 percent from 7.41 percent).

“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,” said Pernia.

Core inflation, which excludes specific volatile food and energy prices, also inched up to 2.5 percent in December 2015 from 2.4 percent in the previous month. The 2016 full year core inflation averaged at 1.9 percent, still lower than the 2.0 percent recorded in 2015.

For 2017 and 2018, NEDA expects inflation to be within the target range of 2.0 to 4.0 percent. This already considers the scenario of higher oil prices, pending petitions for adjustments in electricity rates, but especially, strong domestic economic activity.

Pernia said damage to rice resulting from typhoons Karen, Lawin, and Nina could lead to faster inflation in early 2017. DMS