Inflation impact on poor picks up in Nov.

INFLATION, as experienced by low-income families, accelerated in November after five straight months of slowing down, the Philippine Statistics Authority (PSA) reported on Monday.

The inflation rate for the country’s bottom 30% income households snapped five consecutive months of downtrend and accelerated to 1.7% in November. This was faster than 0.8% in October, albeit slower compared to 8.3% in November 2018.

The latest reading brought the year-to-date pace for this income segment to 3.3%, still slower than the 7.1% average in 2018’s comparable 11 months.

That compared to a 1.3% headline inflation experienced by the average household in November, which was faster than the 0.8% reading in October, but slower compared to six percent in November 2018. Headline inflation likewise inched up in November following five straight months of easing.

The PSA uses the 2012 base year in computing the headline consumer price index (CPI), while the bottom 30% income households’ CPI uses 2000 prices.

Aside from the two measures having different base years, the CPI for the bottom 30% income segment of the population reconfigures the model basket of goods in order to make it more representative of the spending patterns of the poor. For instance, food accounts for 75% of the theoretical basket of goods used by a poor household compared to an average household’s 35.5%.

Inflation for the food, beverage and tobacco index was 1.6% in November, faster than the 0.6% in October.

The food-alone index accelerated to 0.4%, a turnaround from the 0.6% decline in the previous month.

The fuel, light and water index likewise registered a reversal with a 0.2% uptick in November from October’s 0.7% contraction.

Indices that saw an uptick during the period were clothing (to 3% in November from 2.8% in October); housing and repairs (3.7% from 3.5%); and “miscellaneous” items (2.3% from 2.2%).

Services, meanwhile, slowed to 2.7% from 2.8%.

“Inflation for the bottom 30%, like headline inflation, is said to have reached its bottom and is said to be ‘normalizing,’” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail, adding that much of the high price levels seen in 2018 factored into last year’s inflation trend.

“With high base effects dwindling towards the end of 2019, inflation is expected to normalize towards the mid-point of the national government’s target of 2%-4% [for 2019]. Thus, one would expect the same trend when talking about inflation for the bottom 30% of the Philippine population,” Mr. Asuncion added.

For December 2019, Mr. Asuncion expected “another uptick” on inflation for the bottom 30% on account of “higher demand due to seasonal factors.”

“Another reason is the notable increase in fuel prices and electricity,” the economist added.

Last month, Manila Electric Co. (Meralco) said the generation charge for December stood at P5.1967 per kilowatt-hour (/kWh), higher by P0.1650/kWh from the November rate. — Jobo E. Hernandez