February inflation seen hitting 4.1% as ‘sin’ product prices shoot up

In Photo: A woman passes by an aisle at a major grocery store in Makati City.

The inflation rate for the month of February likely settled at 4.1 percent on the back of increased prices of “sin” products, according to the Department of Finance (DOF).

Based on the DOF’s latest economic bulletin on inflation, the country’s inflation level for February likely settled at 4.1 percent, higher than the previous month’s 4 percent and the 3.3 percent recorded in the same month last year.

“While the 4.1 percent forecast may seem to have breached the higher end of the inflation-target range, it is largely on account of the price increase of sin products. These are nonessential and are even harmful products, which we want the general public to steer away from for health reasons. Of the 4.1 percent forecast, 0.4 percentage points are accounted for by  sin products,” the DOF said.

Alcohol and tobacco products fall under the sin product classification.

Advertisement

The DOF sees inflation levels of sin products to reach 16.4 percent for February this year, higher than the 12.3 percent in the previous month and the recored 6 percent in February 2017.

“Food and nonfood commodities alike see their respective rate of price increase relatively unchanged, while those of sin products may have likely accelerated. The latter may be explained partly by price increase due to sin tax hikes and partly by the appropriate price adjustments of Mighty Corp. following its paying the right amount of taxes,” it added.

Prices of food and nonalcoholic beverages is seen settling at 4.4 percent for February, lower than the 4.5 percent registered in January but higher than the recorded 4.1 percent year-on-year (YoY).

Inflation levels for nonfood items is seen settling at 3.1 percent for the month, the same level as the previous month but higher than the 2.5 percent YoY.

Broken down, clothing and footwear may reach 2 percent, lower than the 2.8 percent recorded in the same month in 2017.

Housing, utilities and fuels may reach 3.3 percent, lower than the previous month’s 3.7 percent but higher than the 2.9 percent YoY; while furnishings and household equipment is seen reaching 2.1 percent, higher than the 2 percent in January but lower than the
2.3 percent YoY.

Health may register a 2.4-percent rate, which is lower than the 2.6 percent in January and February 2017; transportation may settle at 4.1 percent, higher than the 3.2 percent in the previous month, as well as the 2.8 percent in February 2017; while communication may remain at 0.4 percent for the month.

Recreation and culture is seen remaining at 1.4 percent; education may increase to 2.3 percent, from 2.2 percent in the previous month and 1.8 percent in the same month in 2017; and restaurants and miscellaneous services may remain at the 3.7-percent level for the month.

Meralco’s rate per killowatt hour may rise to P9.47 for the month, from P9 YoY, and P8.72 in January this year. Its generation charge per kWh may also rise to P4.65, from the P4.32 YoY.

For February diesel prices in the National Capital Region may settle at P41.18 per liter, from P31.34 per liter recorded YoY, while gasoline prices may increase to P52.60 per liter, from P47.68 YoY.

 

Image Credits: Alysa Salen

Turning Points 2018
Suntrust banner2