HIGHER PRICES of cigarettes and alcoholic drinks likely drove inflation faster in February, the Department of Finance (DoF) said.
The DoF said prices overall may have edged higher to 4.1% last month, against January’s four percent climb and the 3.3% recorded in February 2017.
The estimate compares to the 4-4.8% range given by the Bangko Sentral ng Pilipinas (BSP) Department of Economic Research and the 4.2% median of BusinessWorld poll among 14 economists.
February is expected to log another three-year high since a 4.3% rate in October 2014.
“While the 4.1% 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,” the DoF said in its economic bulletin published yesterday.
“These are non-essential and are even harmful products which we want the general public to steer clear away from on health reasons.”
The DoF sees inflation rate for alcohol and tobacco products at 16.4% from the previous year, picking up from the 12.3% increase recorded in January. This contributed 0.4 of a percentage point to headline inflation, according to the department’s estimates.
Signed into law in December as Republic Act No. 10963, the Tax Reform for Acceleration and Inclusion (TRAIN) law introduced additional taxes on fuel, cars, coal, sugar-sweetened drinks and many other items, taking effect on Jan. 1.
The TRAIN raised the excise tax on cigarettes to P32.50 this year, with succeeding increases provided annually. Meanwhile, prices of alcoholic drinks went up by another four percent, as provided under the ‘sin’ tax reform law of 2012.
“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,” the DoF added, referring to bigger taxes remitted by the cigarette producer as Japan Tobacco International, Inc. took over its operations late last year.
This is followed by a 5.5% rise in prices of electricity and fuel products, although slower than the previous month’s 7.2% increase. Transport fares also picked up by 4.1% year-on-year in February, rising from 3.2% a month ago.
The TRAIN also imposed an additional P2.50 excise tax per liter of diesel and P3/liter for kerosene, which comes at a time of three-year highs for world crude prices.
On the other hand, food inflation likely steadied at 4.4% last month, versus January’s 4.5% increase and the 4.1% pace tallied in February 2017.
Cost of dining in restaurants and availing of miscellaneous services rose by roughly 3.7% in February, the DoF said.
The Philippine Statistics Authority will report February inflation data today. — Melissa Luz T. Lopez