By Chino Leyco
The rate of increase in consumer prices quickened to a six-month high in December 2019 following the typhoons that struck the country during the month and the rising global oil prices, the National Economic and Development Authority (NEDA) said Tuesday.
Customers buy vegetables at a market in Manila
(Czar Dancel / MANILA BULLETIN FILE PHOTO)
The country’s headline inflation clocked in at 2.5 percent last month, up from 1.3 percent in November, but it was slower compared with 5.1 percent in the same month in 2018, data from the Philippine Statistics Authority (PSA) revealed.
Socioeconomic Planning Secretary Ernesto M. Pernia said the acceleration of inflation was mainly driven by the uptick in the prices of both food and non-food items due to the impact of typhoons and higher fuel costs in December.
To recall, several areas in the country were hit by Typhoons “Tisoy” and “Ursula” in December, making vegetables, fish and fruits more expensive. Likewise, there was some volatility in global oil prices that pushed local pump prices up.
In December, the heavily-weighted food and non-alcoholic beverages index saw a 1.7 percent annual increase while transport picked up by 2.2 percent.
Likewise, higher price increases were noticed in alcoholic beverages and tobacco at 18.4 percent, while housing, water, electricity, gas, and other fuels rose 1.9 percent as well as furnishing, household equipment and routine maintenance of the house at 3.1 percent.
The December inflation figure brought the 2019 full-year average to 2.5 percent, well within the Duterte administration's target of 2.0 percent to 4.0 percent and slower compared with 5.2 percent in the previous year.
“The country ended last year with steady inflation but the government must remain vigilant and proactive in managing the impact of potential sources of price pressures this year such as typhoons, continuing presence of African Swine Fever in the country,” Pernia said.
He also pointed to the heightened conflict in the Middle East as an upside risk to inflation.
Pernia, meanwhile, said the recovery and rehabilitation plans for the typhoon-affected areas must be immediately implemented and the production support programs for the affected farmers and fisherfolks must be fast-tracked.
“Over the medium to long-term, the agriculture, forestry, and fisheries sector must increasingly adopt climate and disaster-resilient technologies and best practices. Climate and disaster risks should also be considered in the program and project designs in the sector,” Pernia said.
He also mentioned other priority areas such as assisting farmers to shift to high-value, short-maturing, and high-yielding crops, and sustaining biosecurity measures and procedures until the ASF is fully eradicated. This will bring back confidence of consumers in pork products.
Pernia also cautioned that the escalating tension in the Middle East may disrupt global oil supply which could lead to a surge in the prices of petroleum products and overall inflation.
“The government should effectively manage expectations at the domestic front and be vigilant against any unwarranted increase in pump prices considering that the last tranche of excise tax increase on fuel products will be implemented this month,” he added.
Pernia further said that in the short-term, demand management and alternative sources of petroleum products should be explored, and over the medium to long-term, shifting away from fossil fuel and import dependence should be encouraged.
No cause for alarm
Malacañang assured the public that the surge in inflation rate recorded in December 2019 is not a "cause for alarm,” saying it remained within the government target.
Presidential Spokesperson Salvador Panelo maintained that the high inflation remained “a thing of the past,” adding that the government economic team will closely watch over the prices of consumer goods amid the "emerging global threats."
"The uptick in inflation rate in December 2019 to 2.5 percent from November 2019's 1.3 percent should not be a cause for alarm. It remains well within our target range of 2 percent to 4 percent," Panelo said in a statement.
"We consider high inflation, which peaked at 6.7 percent in 2018, as a thing of the past," he added. (With a report from Genalyn D. Kabiling)
READ MORE: Palace assures Filipinos increase in inflation rate last December still within gov’t target