INFLATION REMAINS MANAGEABLE IN JANUARY 2013

MANILA—Higher food and power prices and the implementation of the new sin tax law pushed headline inflation slightly higher to 3.0 percent in January 2013, according to the National Economic and Development Authority (NEDA).

“But the January 2013 headline inflation rate is still within the Development Budget Coordination Committee’s inflation target of 3.0 to 5.0 percent for 2013,” said NEDA OIC Assistant Director-General Rosemarie G. Edillon.

Inflation for the month is higher compared to the 2.9 percent growth in consumer prices in December 2012, although lower compared to the 4.0 percent rate in the same period a year ago.

“The implementation of the new sin tax law which took effect at the start of the year significantly raised the price index of alcoholic beverages and tobacco,” the NEDA official said.

The price of alcoholic beverages went up by 6.9 percent while tobacco expanded by 28.1 percent in January 2013 compared to a year ago.  This resulted in the price index of alcoholic beverages and tobacco increase 17.3 percent from the same month in 2012.  This commodity group, however, constitutes only about 2 percent of the CPI basket.

Meanwhile, higher electricity charges and liquefied petroleum gas (LPG) prices increased the index of electricity, gas and other fuels to 3.1 percent in January 2013 from January 2012.

The Manila Electric Company or MERALCO reported a 6.0 percent (PhP0.3/kWh) increase in its generation charge due to higher costs from suppliers.  LPG prices also increased by 3.3 percent in January 2013 from a year ago.

Moreover, higher annual inflation for food items like meat (1.7% from 1.6% in December 2012), fruit (5.6% from 5.5%), and corn (5.0% from 4.5%) was posted in January 2013 compared to the previous month.

The increase in meat prices was mainly due to the increase in beef rump (0.3%) as prices of other items like beef brisket, pork ham, pork liempo and fully dressed chicken were relatively stable, according to the Bureau of Agricultural Statistics.

However, cheaper petroleum prices were observed in January 2013, which helped curb inflation. The increase in the consumer price index of transport eased to 1.1 percent in January 2013 from 1.2 percent in the previous month.Core inflation, which excludes selected volatile food and energy prices, climbed 3.6 percent in January 2013 from 3.3 percent in the previous month but lower compared to January 2012’s 4.3 percent.

Meanwhile, headline inflation in the National Capital Region (NCR) eased to 2.4 percent in January 2013, slower compared to 2.8 percent in December 2012 and 3.5 percent in January 2012. This is lower than the inflation rate in Areas Outside NCR (AONCR) that reached 3.3 percent in January 2013, which is higher than the previous month’s 2.9 percent but slower than January 2012’s 4.0 percent. 

Edillon also noted that the overall growth of consumer prices in the Philippines continued to be lower compared to that in Indonesia and Thailand in January 2013.

Headline inflation in Indonesia and Thailand registered at 4.57 and 3.39 percent, respectively, during the period.

M.R. No. 2013-016                                                                                 

05 February 2013