The government’s tax-reform program is not the main culprit for the high inflation rate posted in January, according to the National Economic and Development Authority (Neda).
In a news statement, Socioeconomic Planning Secretary Ernesto M. Pernia said the Tax Reform for Acceleration and Inclusion (TRAIN) is expected to account for only 0.7 percent of inflation this year.
Pernia said one of the reasons a January inflation hike is high rice prices, which accounted for 23 percent of the poor households’ expenses.
“We have to closely monitor the buffer system of rice to ensure that there is no considerable spike in the price of rice,” Pernia said.
“It is also possible that certain merchants have taken advantage of the situation by raising the prices of their goods prematurely. It is so easy to point a finger at TRAIN,” he added.
In a recent Senate hearing, the Department of Finance also said among these factors are the increase in the prices of crude oil in the international market and the drop in the exchange rate.
Neda Undersecretary for Policy and Planning Rosemarie G. Edillon also attributed the increase in the prices of food commodities, such as corn and meat, to typhoons that hit the country in December last year.
In order to address these price increases, Edillon said there is a need to encourage more investments, or for existing firms to expand production.
“For these, the second round of tax reform, or TRAIN 2, is critical. This should be accompanied by the passage of the ease of doing business bill,” Edillon said.
In January the Philippine Statistics Authority reported the increase in commodity prices reached 4 percent, which is the high end of the Bangko Sentral ng Pilipinas’s target for the year. The uptrend was primarily due to the higher annual increment in the heavily weighted food and non-alcoholic beverages index, as it accelerated by 4.5 percent, from previous month’s growth of 3.5 percent.
Moreover, the index for alcoholic beverages and tobacco registered double-digit annual markup at 12.3 percent in January 2018, from 6.4 percent in December 2017.