Faster non-food inflation to continue — DOF

Published May 10, 2021, 5:30 AM

by Chino S. Leyco

The Department of Finance (DOF) expects non-food inflation to continue inching up in the coming months due to base effects from record low prices of petroleum products last year.

In the latest DOF economic bulletin, Finance Undersecretary Gil S. Beltran noted that non-food price inflation went up to 3.84 percent in April from 3.21 percent in the previous month.

“Base effects from energy prices on year-on-year inflation will continue to be felt in the coming months,” Beltran warned, citing that Dubai crude price had doubled from its second-quarter level in 2020.

Based on the World Bank data, Dubai crude price averaged at $64.77 per barrel last April, a whopping 178.3 percent increase from $23.27 per barrel in the same month last year, the lowest since December 2002.

The finance official, however, said government interventions aimed at tapering high inflation on some food items, particularly pork meat, would help ease the increasing fuel prices.

“Hog repopulation will be the medium-to long-term measure to address the supply-side issue. Meanwhile, imports should be able to address the shortfall in domestic supply and help ease meat price inflation,” Beltran said.

Preliminary data from the Philippine Statistics Authority showed that hog ending inventory declined by more than 24 percent by the end of last year.

Earlier, Socioeconomic Planning Secretary Karl Kendrick T. Chua raised anew the need to urgently augment the local pork supply through importation, noting that meat remained as the top contributor to inflation last month.

Chua said the temporary reduction of pork tariffs and the increase of its minimum access volume will immediately curb the rising pork inflation for the benefit of some 100 million Filipinos.

“Meat has been persistently the top contributor to inflation this year, hence we urgently need to temporarily augment our pork supply through importation. Retaining the status quo will cause 100 million Filipinos to suffer longer from high food prices,” Chua said.

Meanwhile, Beltran also feared that animal raisers in general may face higher production costs this year.

“World Bank data shows that the price of corn in the international markets rose to $268.23 per metric ton in April, the highest since August 2013. Corn is an important input in animal feed processing,” the DOF official said.

In April, the general price level maintained its pace last month at 4.5 percent owing to base effects. However, this price change is more than twice the inflation rate of 2.17 percent a year earlier.

The acceleration in non-food price inflation (3.84 percent) and major food items such as fish (5.98 percent) and meat (22.06 percent) was offset by the deceleration in price of many food items such as rice (-0.26 percent), vegetables (-2.62 percent), and other food products (0.54 percent).

Month-on-month, the general price level declined by 0.08 percent in March, largely on account of major food items, namely: vegetables (minus 6.03 percent); fruits (minus 0.80 percent); and other food products (minus 0.53 percent).