High inflation could be partly due to profiteering, DOF says

March 1, 2018

The Department of Finance blamed higher inflation to profiteering and not due to the new tax reform measure, an official said Thursday.

In a press briefing in Malacanang, Finance Undersecretary Karl Kendrick Chua said the four percent inflation rate last January was not attributable to the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

"TRAIN is unlikely to be the reason for the higher inflation that we have seen. Why? Because most of these firms selling alcohol, tobacco, sugar sweetened beverage, oil, are still selling old stock which they bought in 2017 and should not be levied the higher excise. So if there is any higher inflation that we have seen, it’s probably due to other reasons," he said.

"There is no reason for TRAIN to be the cause for the slightly higher inflation. And if there is, it would be other factors and profiteering might me a reason, because we have already seen some evidence of it," he added.

Chua admitted that it is difficult to catch businessmen engaged in profiteering.

But he said since the first day that TRAIN was implemented this year, the Department of Trade and Industry and the Department of Energy have been going around to monitor  prices of goods, including oil and fuel.

"So we just have to be vigilant, continue our work in monitoring and for the public to inform the government if there are taking advantage of the price," he said.

Inflation in January rose to 4 percent from 2.7 percent in the same period last year and from 3.3 percent in December 2017.

The January inflation is the higher-end target of the 2 to 4 percent inflation for this year.

Chua maintained that based on the initial estimate, TRAIN could contribute maximum of 0.7 percent to inflation for the whole year. Celerina Monte/DMS