Philippine headline inflation for December was at two-year high as it jumped to 4.1 percent from 3.3 percent in November, as prices of commodity groups increased which was attributed to the devastation of Super Typhoon Yolanda and power rate hikes.
Data from the National Statistic Office (NSO) showed that his was the highest inflation since December 2011, while inflation a year ago was 3 percent.
“The year-on-year headline inflation at the national level jumped to 4.1 percent in December from 3.3 percent in November as all commodity groups recorded higher annual increases except communication; recreation and culture; and education,” the NSO stated.
Despite the uptick, the inflation rate for December falls within the Bangko Sentral ng Pilipinas (BSP) forecast of 3.8 percent to 4.7 percent for the month.
“The uptick in inflation for December is consistent with our assessment that inflation in the near term would reflect the drag form supply disruptions due to the natural calamities. We do not, however, expect the drag to persist,” BSP Governor Amando Tetangco Jr. said in a text message on Tuesday.
For his part, Socioeconomic Planning Secretary Arsenio Balisacan said that almost all food items in the average consumer basket increased, which can be mainly attributed to the impact of the super typhoon that hit the central Philippines in November 2013.
Food prices went up by 5 percent in December from 4 percent in the previous month as prices of rice, vegetables, meat, fish and fruits increased during the month.
Balisacan, also the National Economic and Development Authority (NEDA) director general, said that power hikes contributed significantly to the acceleration of overall inflation in December 2013.
The NEDA chief noted that the Manila Electric Co. generation charge significantly rose by 40 percent, or P2.19 per kilowatt-hour, year-on-year in December 2013 because of the scheduled and unscheduled power outages in major power plants. However, the power distributor deferred to further implement the electricity rate increase following a 60-day temporary restraining order issued by the Supreme Court.
Domestic prices of petroleum products also rose as world oil prices jumped to 1.4 percent year-on-year from -1.2 percent in November for Dubai crude oil.
“This is while the peso depreciated further by 7.6 percent in December 2013 from 5.9 percent in the previous month,” said Balisacan.
Full-year rate at 3 percent
Meanwhile, annual inflation rate for 2013 remains within the target band of the BSP as it averaged 3 percent for full-year 2013. It was lower compared to the 3.2 percent in 2012.
“The full-year 2013 average inflation stands at 3 percent, just at the lower end of the government’s target range [of 3percent to 5 percent], making 2013 the fifth consecutive year that full-year inflation has been within target,” Tetangco said.
The central bank governor added that inflation for 2014 is seen to remain within its 3-percent to 5-percent target range.
“Therefore our assessment remains that for 2014, full-year inflation would be within target, albeit slightly above the mid-point of the target range,” he said.
Tetangco also noted that the policy stance of the BSP is still appropriate “given this assessment of continued within-target inflation.