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Inflation for poor households eases in February

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PHLSTAR

INFLATION, as experienced by low-income households, eased in February, the Philippine Statistics Authority (PSA) said Tuesday.

The inflation rate for households in the bottom 30% income range was 2.2% in February, less than the 2.3% recorded in January and the year-earlier 4.3%.

Headline inflation was 2.6% in February, which slowed from the 2.9% recorded in January and the year-earlier 3.8%.

The poor-households inflation indicator is weighted more towards the goods they are likely to consume, while the headline Consumer Price Index (CPI) measures price movements in a basket of goods used by a typical household.

The February reading brings year-to-date price growth for this income segment to 2.2%, well below the year-earlier growth of 4.8%.

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This was the second time the bottom-30% index used 2012 as the base year, making it directly comparable with headline CPI. Prior to the rebasing, it used 2000 prices.

The PSA noted slowing price growth in food and non-alcoholic beverages (0.5% from 0.7% in January 2020); alcoholic beverages and tobacco (21.9% from 22.4%), transport (2.9% from 3.5%), and communication (0.3% from 0.4%).

“Food was likely the main reason for the dip in inflation with vegetables, rice and selected fruits experiencing slower inflation as food supply chains normalized after the storms in late 2019. Transport prices are also one reason for lower inflation in February as crude oil prices fell worldwide,” ING Bank N.V.-Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

Food inflation for the poorest households was 0.4% in February, slowing from 0.6% the previous month.

Price growth eased in meat (2% from 2.1%); fish (8.1% from 8.7%); vegetables (5.3% from 6.6%); and food products “not elsewhere classified” (7.9% from 8.5%).

Prices continued to decline for rice (-6.3% from -6.5%); corn (-4.6% from -2.6%); and sugar, jam, honey, chocolate and confectionery (-2.8% from -3.3%).

Inflation for poor households in Metro Manila eased to 1.9% in February from 2.1% in January. Those living outside the capital experienced inflation of 2.2%, down from 2.3% previously.

ING’s Mr. Mapa noted these February prices do not yet reflect the enhanced community quarantine (ECQ) in Luzon, which was imposed in March. “[G]iven that the Department of Trade and Industry (DTI) has induced a price freeze, we are not sure if PSA will be able to accurately report inflation,” he said.

“In the past, inflation for areas under the state of calamity are excluded from the survey and given ECQ covers Luzon, we are not sure if it will continue given that interviews are conducted face to face,” he added.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion expects price growth in March to “soften further.”

“With the collapse of global oil prices and the corresponding price freeze implemented by government agencies concerned, annual increases may have slowed down further because of the ECQ on Luzon,” he said in a separate e-mail.

The DTI, along with the Agriculture and Health departments, issued on March 18 a joint memorandum circular announcing the price freeze on goods after the declaration of the state of calamity.

Prices of basic goods were frozen from March 16 to May 15, following President Rodrigo R. Duterte’s declaration of a six-month state of calamity on March 16 in response to the outbreak of coronavirus disease 2019.

An initial price freeze was put into place after a declaration of public health emergency on March 8. — Jobo E. Hernandez

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