Philippine inflation rate hits 3-year high

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FILE PHOTO. The rise in prices of widely-used goods will likely be at its fastest pace in August or September, a central bank official said.

Metro Manila (CNN Philippines, March 6) — The country's year-on-year headline inflation rate hit a three-year high this February 2018, a report from the Philippine Statistics Authority (PSA) revealed Tuesday.

Inflation picked up by 3.9 percent in February-- higher than the 3.4 percent growth in January and the 3.1 percent recorded in the same period in 2016. The last period the country's inflation rate rose this high was in September 2014.

The growth comes as the food and nonalcoholic beverages index reached 4.8 percent, and alcohol and tobacco, 16.9 percent, PSA said.

Other commodity groups that had higher annual increases include clothing and footwear at 2 percent, furnishing, household equipment, and routine maintenance of the house at 2.5 percent, transport at 5.8 percent, and restaurant and miscellaneous goods and services at 2.5 percent.

Food alone had an annual mark-up of 4.8 percent compared to the 4.6 percent in January and 3.2 percent in February 2017.

PSA, however, noted housing, water, electricity, gas and other fuels had lower annual hikes at 2.6 percent.

Communication and recreation and culture also had lower inflation rates, at 0.2 and 1.4 percent respectively, while, other commodity groups retained their previous rate.

Consumer prices, however, moved at a rate of 0.8 from last month-- slower than the 0.9 percent rated posted in January.

The National Capital Region (NCR), meanwhile, retained an annual inflation rate of 4.7 percent also recorded in January 18.

The food and non-alcoholic beverages index in NCR saw a higher annual increase at 6.6 percent, while alcoholic beverages and tobacco had a double-digit annual mark-up at 21.2 percent, PSA said.

The trend continued for regions outside NCR, where inflation grew at 3.7 percent in February 2018 compared to 3.1 percent in January and 3 percent in February 2017.

All regions except Region IV-B (MIMAROPA) and Region XI (Davao Region) had higher inflation this February. The Autonomous Region of Muslim Mindanao (ARMM) had the highest annual rate at 6.0 percent.

The indices of food and non-alcoholic beverages outside of NCR rose to 4.5 percent while alcoholic beverages and tobacco reached 16.0 percent.

Clothing and footwear, household equipment and maintenance, health, transport, education, and restaurant and miscellaneous goods also had faster annual gains.

NEDA calls for measure to curb inflation

Following the spike in prices, the country's economic development authority has called for increased measures to curb inflation, and cushion its impact on the poor.

In a press release Tuesday, National Economic and Development Authority (NEDA) said such efforts are "urgently needed" as the February 2018 index hit the "upper band" of the government's 2.0 to 4.0 target.

"The transitory impact of the TRAIN Law (Tax Reform for Acceleration and Inclusion Law) and the continued depreciation of the Philippine peso will mainly influence price movements in the coming months, and we must ensure that mitigating measures should be in place," NEDA Secretary Ernesto Pernia said.

Pernia had earlier said around 0.7 percent at most of inflation in 2018 will likely be due to TRAIN.

He said given the inflation rates, the government must pay "closer attention" to the poor, citing the need to expand the Pantawid Pamilyang Pilipino Program (4Ps) providing conditional cash grants to the poorest of the poor, and to speed up the distribution of unconditional cash transfers from the country's tax reform law.

Pernia also called for the replacement of quantitative restrictions on rice with tariffs-- a move he said would lower the price of raise and increase revenue from agricultural programs.

He added, the government through the Department of Trade and Industry, should further monitor businesses to prevent "profiteering" and ensure they comply with local regulations on pricing.

"We must enforce fair consumer pricing among businesses: In January, there were anecdotal reports that some of them are taking advantage of the TRAIN Law by prematurely increasing their selling prices despite no additional input costs to their production and services brought about by the law," Pernia said.

The TRAIN law, signed by President Rodrigo Duterte in December, is just one of the five tax packages under the administration's comprehensive tax reform plan. The bill exempts those earning ₱250,000 or less a year from income tax, but also hikes tax on products including sweetened beverages and petroleum products.

READ: Duterte: 2018 budget, TRAIN govt's biggest Christmas gift to Filipinos

The Bangko Sentral ng Pilipinas (BSP), meanwhile, said there is no cause for alarm. It said the rise in consumer prices is temporary as the effects of tax reform kick in, and prices should go back to normal by 2019.

BSP Governor Nestor Espenilla also hinted it's unlikely inflation will trigger an increase in interest rates for now.

CNN Philippines' Claire Jiao and Amanda Lingao contributed to this story.