DOF Economic Bulletin on Inflation for February 2018

 

March 7, 2018 

Inflation rose to 4.5% (using 2006 as base year) in February 2018 from 3.95% in January 2017. This is 0.55 percentage point higher than in the previous month.

 

The biggest increases came from:

 

1.         Food and non-alcoholic beverages---by 0.16 percentage point. 

 

Of food items, the biggest increases came from:

 

a.   Rice--- by 0.12 percentage point as rice prices rose by 2.8% in February from 1.5% last month– This is due to NFA’s withholding of rice supply from commercial outlets thus leaving consumers to purchase higher-priced commercial rice.

 

b.    Non-alcoholic beverages--- by 0.03 percentage point as prices rose from 2.8% to 4.8% – This is due to the tax on sugar-sweetened beverages. 

 

2.         Alcoholic beverages and tobacco ---by 0.09 percentage point as this commodity group raised prices by 16.9%  (from 12.2% in January) due to the 4% sin tax adjustment and improved tax compliance by a major producer.

 

3.         Non-food items---by 0.27 percentage point. 

 

a. The biggest item, restaurants and miscellaneous services, rose by 0.24 percentage point as restaurants adjusted prices due to higher prices of food inputs including sugar-sweetened beverages.

 

b. Transport also pushed up the index by 0.10 percentage point as private transport fuel rose by 7.2%.  

Transport fuel price adjustments were due primarily to higher world prices of petroleum products. Only a little less than 10% could be attributed to excise tax adjustment under TRAIN.

 

World petroleum prices rose to US$63/barrel in January-February 2018 from US$53.5/barrel the year before, an 18% increase. Add to this the 2.6% exchange rate depreciation in January and February (from P49.85/US$ to P50.5) and the total adjustment should be 20.8% vs. 7.2% actual adjustment. 

 

Inflation was caused mainly by rice, restaurant charges due to sugar-sweetened beverages and fuels and transport, due to the 18% rise in world prices.