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Former police chief Purisima cleared of corruption

THE Sandiganbayan on Friday acquitted former Philippine National Police chief Alan L.M. Purisima of perjury charges over the alleged misdeclaration in his statement of assets, liabilities and net worth.

Mr. Purisima was accused in February 2018 of eight counts of perjury for allegedly failing to declare the worth of his properties for 2006 to 2009, and 2011 to 2014.

Mr. Purisima allegedly failed to declare the property of his wife in his 2006 and 2007 net worth declaration, according to his charge sheet, among other things.

Hie acquittal came even after the anti-graft court denied on a technicality his plea to file a motion to dismiss the case.

The Sandiganbayan last month also dismissed for insufficient evidence graft and usurpation charges against Mr. Purisima over a 2015 anti-terrorist operation where 44 Special Action Force men were killed by Muslim rebels in Mamasapano town, Magindanao province. — Genshen L. Espedido

AirAsia adds more domestic flights, removes Clark-Seoul route

By Arjay L. Balinbin, Reporter

ANGELES CITY, Pampanga—Philippines AirAsia, Inc. will be launching two new domestic routes this year to further boost domestic tourism amid the coronavirus outbreak that has dampened its revenues in the first two months of the year.

This was after the budget carrier announced recently its new flights to Zamboanga, General Santos City, and Dumaguete City via Clark International Airport in Pampanga.

In a news conference in Angeles City, Pampanga on Friday, Philippines AirAsia Chief Executive Officer Ricardo P. Isla said: “We have talked to local officials of various provinces, and they are all excited to fly via AirAsia already. We are going to fly to two additional destinations via Clark [International Airport].”

“Why Clark? Clark is really the most practical way to do domestic and international flights because it’s accessible and, more importantly, we always offer low pricing in Clark going to both domestic and international destinations. We get better incentives or rates from the airport of Clark,” he added.

Mr. Isla also said that AirAsia is working with the Tourism department to boost Pampanga’s tourism industry.

The budget carrier, he said, will also be adding flights to at least three of its existing international destinations such as Ho Chi Minh, Vietnam; Bangkok, Thailand; and Osaka, Japan.

As for the impact of the coronavirus outbreak on the budget carrier’s financial performance, he said: “We cannot disclose at this point our losses but it’s quite big, frankly speaking.”

“But we were prepared. We think we strengthened our position. Even last year, we saw a lot of potential in domestic tourism, and that’s a big source of our growth for this year,” he added.

CLARK-SEOUL FLIGHTS TO DISCONTINUE
Philippines AirAsia Chief Commercial Officer Gilbert O. Simpao said the airline will discontinue its Clark, Pampanga-Seoul, South Korea flights amid low passenger demand.

The Clark-Seoul route was launched in January 2018. Flights depart in Clark at 5:50 p.m. and arrive in Incheon at 10:35 p.m. on Tuesday, Thursday and Saturday. Flights leave Incheon at 11:25 p.m. on Tuesday, Thursday and Saturday, and arrive in Clark at 2:35 a.m. the next day.

“The Clark-Incheon flights will be removed. It isn’t doing well,” Mr. Simpao said.

The Philippine government on Wednesday barred travelers from South Korea’s coronavirus-stricken North Gyeongsang province as it tries to contain the outbreak.

The government will also prevent Filipinos from traveling to South Korea, where more than 1,000 people have been infected with the novel coronavirus strain. The ban also covers the Jeju Island.

About two million South Koreans visited the Philippines in 2019, flying from Seoul, Busan, Cheongju, Daegu, Gimpo, Jeju and Muan.

PAL slashes 300 jobs to stem worsening losses

FLAG CARRIER Philippine Airlines (PAL) announced on Friday that it has cut about 300 jobs as a way to recover from its 2019 losses, which worsened in the first two months of 2020 due to the coronavirus outbreak.

PAL, operated by PAL Holdings, Inc., said in a statement on Friday that it is “pursuing business restructuring to increase revenues and reduce costs.”

It added that it is hoping that “the streamlining will strengthen the company in the wake of losses sustained in 2019, aggravated by the ongoing travel restrictions and flight suspensions to areas affected by COVID-19 (coronavirus disease 2019).”

PAL said it had implemented a “voluntary separation initiative for long-serving employees.”

“A retrenchment process was completed on Friday, resulting in the separation of about 300 ground-based administrative and management personnel,” the airline said.

It also said that it assured its employees that they would receive their separation benefits and privileges.

“Other initiatives include revenue generation from an optimized route network and new ancillary products, more aggressive cost-management efforts, and investment in digital technology,” PAL said, adding that it remains focused on managing the risks related to the coronavirus outbreak.

The airline will continue to take delivery of additional aircraft for its regional flights as it prepares to launch new Cebu-Los Angeles flights and routes to Perth, Pagadian, Kota Kinabalu and Manado, it said.

In the nine months ending September, PAL’s attributable net loss widened 116.2% to P8.5 billion from P3.92 billion, as expenses and financing charges increased.

PAL, along with other major local airlines, cancelled flights to and from China, Hong Kong, Macau and Taiwan recently amid the COVID-19 outbreak that has killed more than a thousand people and sickened tens of thousands more in the mainland.

Roberto Lim, executive director and vice-chairman of the Air Carriers Association of the Philippines, Inc., has said they expect to lose about P3 billion from ticket refunds in the next two months after the Philippine travel ban on China and its administrative regions.

On Wednesday, the government barred travelers from South Korea’s coronavirus-stricken North Gyeongsang province.

The government will also prevent Filipinos from traveling to South Korea, where more than 1,000 people have been infected with the novel coronavirus strain. — Arjay L. Balinbin

Senate, SC should not allow VFA termination — ex-diplomat

A FORMER Foreign Affairs secretary urged lawmakers and the Supreme Court not to allow President Rodrigo R. Duterte to end a military agreement with the US on the deployment of troops for war games.

“What is unfolding before us is a national tragedy which should be resisted,” former Foreign Affairs Secretary Albert F. del Rosario said at a forum on Friday. “We therefore appeal to our esteemed institutions such as Congress and the Supreme Court to help us resist this tragedy.”

“We appeal to the conscience of our military whose duty under the Constitution is to defend the integrity of our national territory,” he said.

Mr. del Rosario said Mr. Duterte’s decision to end the visiting forces agreement (VFA) with the United States would “effectively upend the Philippine-US alliance.”

“While the VFA is admittedly an imperfect agreement, its termination would interrupt the benefits of the Mutual Defense Treaty with regard to the joint training and exercises, the pursuit of modernization, achieving interoperability, providing assistance during natural calamities and being effective partners in addressing our challenges in respect to counter-terrorism,” Mr. del Rosario said.

He cited the need to keep the alliance with the US ”for the sake of our countrymen who want to protect their country’s territory.”

Mr. Duterte on Feb. 11 announced the termination of the two-decade-old VFA, which the US Embassy said was “a serious step with significant implications.”

Mr. Duterte’s decision, sparked by the revocation of a US visa held by a former police chief who led Mr. Duterte’s bloody war on drugs, takes legal effect in six months and US officials have expressed hope it can be reversed or delayed.

Mr. Duterte’s decision could complicate US military interests in the broader Asia-Pacific region as China’s ambitions rise.

Ending the VFA complicates Washington’s efforts to maintain an Asia-Pacific troop presence amid friction over the presence of US personnel in Japan and South Korea and security concerns about China and North Korea.

Jose Manuel G. Romualdez, Philippine ambassador to the US, said the US is a major country that the Philippines, even China, “cannot ignore.”

He said the VFA is “not really the end all and be all” and there are other relationships with the US that can be worked on outside the agreement.

Meanwhile, former Supreme Court Justice Antonio T. Carpio belied Mr. Duterte’s claim that the Philippines can choose to become a US or Chinese territory if it could be self-reliant.

“It’s a false choice because it’s not true that we should be either a Chinese province or a US territory because we can have alliances,” he said at the same forum.

“And under the United Nations charter, collective self-defense is allowed,” he added. — Vann Marlo M. Villegas

Senate chief says anti-terror measure won’t lead to abuses

THE Senate on Friday ruled out police abuses after it approved on final reading a bill that seeks to boost the government’s anti-terrorism thrust.

“We at the Senate have been working hard to make our people feel safe in their homes and communities,” Senate President Vicente C. Sotto III said in a statement.

“The threat of nefarious individuals disrupting our peaceful lives is something that we all fear about, but is something that lawmakers can do something about,” he added.

The chamber this week approved Senate Bill 1083 or the proposed Anti-Terrorism Act will repeal the Human Security Act of 2007.

The measure gives the military increased access to data for surveillance and allows wiretapping of terror suspects.

Senator Francis N. Pangilinan, one of two senators who voted against the bill, said the measure could be abused by police.

He said the new definition of terrorism is “vague and encompassing, making it open to abuse.”

He also opposed clauses allowing the military to access data and information, and intercept private communications of suspects under surveillance and detain them for 14 days without an arrest warrant. — Charmaine A. Tadalan

MORE Power starts PECO assets takeover

By Emme Rose S. Santiagudo, Correspondent

ILOILO CITY — Razon-led MORE Electric and Power Corp. (MORE Power) started taking over the distribution assets of Panay Electric Co., Inc. (PECO) in Iloilo City Friday following a local court order granting its petition for a writ of possession.

Tension, however, loomed at the PECO head office and other substations as company officials and employees refused to receive the court order and the addendum outlining guidelines for a peaceful transition.

Under the addendum, MORE Power employees may be deployed to oversee the facilities but “operation should still be handled by PECO personnel who has the technical expertise.”

MORE Power employees, accompanied by the local sheriff, members of the court, and police officers just went around the PECO compound to identify properties listed under the writ of possession after the main building’s doors were closed.

MORE Power claimed that as of 11:15 a.m Friday, it has taken over the substation in General Luna Street, one of PECO’s five substations.

“MORE Power had effectively taken possession and control over the machinery, land, and buildings used as the meter lab, power plant building, and switchboard house,” company legal officer Allana Mae A. Babayen-on said in a press briefing.

MORE Power President and Chief Operating Officer Roel Z. Castro said they are working to take possession of the other substations.

“Everything we are doing is in accordance with the court order. We are very grateful that the court upheld our position on the matter of the writ of possession. This is clearly the people’s victory of our great City of Iloilo,” he said.

Mr. Castro also said they will start their operations even without the certificate of public convenience and necessity (CPCN) from the Energy Regulatory Commission (ERC).

“It is unusual in the sense that this is the first time that this happened. So far, we have complied with the requirements of CPCN and we are positive that ERC will issue it by next week. Few days of no CPCN is not a problem. If this is something that is being questioned, why don’t we question the franchise of PECO. Between the two, the franchise is stronger,” he said.

‘HIGHLY IRREGULAR’
PECO, on the other hand, asserts that the attempted takeover is “unprecedented” and “highly irregular”.

“I don’t know what control they have. It’s unprecedented, shocking, highly irregular. The issue of constitutionality is still pending at the Supreme Court and they, MORE is trying to force its way,” PECO legal counsel Estrella C. Elamparo said.

A case filed by PECO questioning the constitutionality of some provisions of MORE Power’s franchise is pending before the Supreme Court.

PECO also said in a statement that it will continue to “exhaust all possible legal remedies to pursue justice and continue to serve the people of Iloilo.”

The 14-page Iloilo court decision, dated February 20, was issued by Judge Emerald Requina-Contreras of the Regional Trial Court Branch 23.

Ms. Contreras, the third judge to handle the case after two others inhibited themselves, said in the decision that “the primary goal of the court is a smooth and peaceful transition of operation, to protect the public interest of the people of Iloilo City and its businesses, and to ensure the uninterrupted supply of electricity.”

She added that it was the “ministerial duty of the court” to issue the writ of possession as two previous judges had already afforded due process to PECO and MORE Power.

MORE Power sought the writ of possession through an expropriation case filed on March 11, 2019.

PECO’s application for the renewal of its franchise, which expired last Jan. 19, was denied by Congress.

A new franchise was granted to MORE Power through Republic Act 11212, signed into law by President Rodrigo Duterte on Feb 14, 2019.

Great deals await you at UCPB Auto Warehouse’s Valentine weekend deals

Make your heart race this Valentine’s season with exciting deals at the UCPB Auto Warehouse!

Enjoy up to 10% discount on the published selling price of an array of affordable and quality pre-owned cars ranging from compact and subcompact cars, sedans, family vans and trucks until February 29, 2020.

Visit the UCPB Auto Warehouse, Oyster Plaza, Dr. A. Santos Avenue, Brgy. San Dionisio, Parañaque City to find out the perfect fit for your personal or business needs. You can pay in cash or avail of the UCPB DrivEasy Auto Loan to better manage your budget.

The UCPB Auto Warehouse is open every day including holidays from 8:30 am to 7:00 pm. Go to www.ucpb.com/propertiesforsale for the complete list of available vehicles. Watch out for upcoming weekend deals by checking the UCPB website or liking the UCPB Facebook page. For Waze users, type UCPB Auto Warehouse-Oyster Plaza Parañaque.

Promo runs from February 13, 2020 to February 29, 2020. Per DTI Fair Trade Permit No. 02985, Series of 2020. Terms and conditions apply.

PearlPay Indonesia partners with Association of Rural Banks in Central Java

Filipino fintech PearlPay further expanded their presence in Indonesia through a strategic partnership between PT Mutiara Garuda Digital (PearlPay Indonesia) and the Association of Rural Banks in Central Java (Perbarindo Perhimpunan Bank Perkreditan Rakyat Indonesia DPD JAWA TENGAH).

The signing, which took place last February 24, 2020, will kickstart the digital transformation of 252 rural banks in the province, granting them access to PearlPay’s end-to-end digital banking solutions. This new partnership more than doubles PearlPay’s network of rural banks in Southeast Asia, providing them with the means to expand and serve more people.

“I understand that rural banks are in the best position to be purveyors of innovative technology, better financial inclusion, and more regional economic development,” said PearlPay Indonesia CEO Mr. Yoni Depari.

Before taking on the role of leading PearlPay’s Indonesian operations, Mr. Depari served as the Deputy Director at the Central Bank of Indonesia.

According to Pak Dadi Sumasarna, President of the Association of Rural Banks in Central Java, the affordable pricing of PearlPay’s platform will help rural banks participate and thrive in the digital economy. Currently, the association is serving 1.5 million depositors. But by digitizing the rural banking industry, banks can further improve their capabilities and speed up their processes, helping them to potentially address the financial needs of 34.5 million Indonesians in Central Java.

National government fiscal performance (December 2019)

INFLATION may have quickened slightly in February due to higher food prices, which was likely offset by lower utility and oil prices amid the coronavirus disease 2019 (COVID-19) outbreak and subsiding risks from the Taal Volcano eruption. Read the full story.

National government fiscal performance (December 2019)

Budget gap widens to record P660B

THE BUDGET DEFICIT widened to a record P660.2 billion in 2019, as the government spent nearly P500 billion, mainly for infrastructure projects and social protection programs, in December alone.

Data from the Bureau of the Treasury (BTr) released on Thursday showed expenditures of P3.797 trillion jumped by 11.42% for the full year, outpacing the 10% rise in revenues to P3.137 billion.

The full-year budget gap breached the P620-billion deficit programmed for the year, and is 18.27% higher than the P558.3- billion deficit in 2018. This translated to 3.55% of gross domestic product (GDP), exceeding the 3.25% limit for the year.

The Development Budget Coordination Committee (DBCC) set a budget deficit ceiling of P610 billion or 3.2% of GDP for 2019.

“Expenditures sped up despite the delay in the approval of the 2019 budget as line agencies caught up with spending towards the latter part of the year,” the BTr said in a statement.

For December, expenditures surged 57.83% to P494.4 billion — the highest-ever monthly spending recorded, while revenues grew by 4.77% to P243.3 billion.

“In particular, disbursements for the month of December surged by P181.1 billion… backed by strong infrastructure spending of the DPWH (Department of Public Works and Highways), implementation of social protection programs and services of the DSWD (Department of Social Welfare and Development), and personnel services expenditures with the grant of the Service Recognition Incentive, payment of pension and retirement benefits, as well as requirements for the creation and filling of positions in various agencies,” the BTr said.

The budget shortfall for December widened to P251.1 billion from an P81 billion deficit in the same month in 2018.

“The higher spending recorded in December could help offset the potential effects of the virus fallout,” Jonathan Ravelas, chief market strategist at BDO Unibank Inc., was quoted by Bloomberg as saying. “If they are able to continue this pace of spending, it could help the economy more.”

Like many Asian countries, the Philippines is looking to cushion the economic impact of the coronavirus disease 2019 (COVID-19) which continues to spread around the world.

Nicholas Antonio T. Mapa, senior economist at ING Bank NV-Manila Branch, said he expects the strong government spending in the first half to “insulate” the economy this year as COVID-19 will likely curb household spending.

He also said the strong spending data could prompt an upward revision of the 2019 GDP growth to six percent from its current 5.9%.

“The surprise surge in spending in December is reflected in the aggressive borrowing stance of the BTr of late and we can expect this behavior to continue given the concurrent 2019 and 2020 budgets running parallel this year,” Mr. Mapa said in a note sent to journalists.

SPENDING SURGE
Actual government expenditures last year exceeded the BTr’s P3.769-trillion spending plan by 0.74%.

Broken down, primary expenditures — total spending net of interest payments — reached P3.436 trillion last year, exceeding the P3.370-trillion program and 12.34% up from the P3.059 trillion spent the previous year.

Interest payments also rose 3.34% year-on-year to P360.9 billion, but was 9.68% below the P399.6-billion target.

The BTr said interest payments as a percentage of revenue and expenditures declined to 11.50% and 9.50%, respectively (from 12.25% and 10.25% in 2018), “highlighting affordability and sustainability in the country’s debt and borrowing operations.”

Meanwhile, national government revenues increased by 10% to P3.137 trillion in 2019, falling 0.39% short of the P3.149-trillion program for the year.

Broken down, tax collections accounted for the 90.1% or P2.827 trillion of the year’s total revenues. While tax collections increased 10.21% year on year, the figure was still 4.3% short of the P2.955-trillion target last year.

“Revenue effort went up to 16.86% from 16.36% in 2018 and exceeded the program of 16.51% [while] tax effort [stood at] 15.19% lower than the goal of 15.49% but higher than the previous year’s 14.72%,” the BTr report read.

The Bureau of Internal Revenue (BIR) collected P2.175 trillion last year, up 11.46%, while the Bureau of Customs collected P630.3 billion, a 6.27% increase from year-ago figures.

However, the country’s two largest tax-collecting agencies fell short of their targets, with BIR’s tax collections 4.22% lower than its P2.27 trillion goal and BoC’s collections 4.65% less than the P661.0-billion goal.

The BTr said the BIR missed its target due to lower revenues from the excise tax on fuel and sweetened drinks, while Customs’ shortfall was mainly due to the stronger peso and lower volume of importations.

Meanwhile, taxes collected by other offices inched up 5.33% to P22 billion but were 4.27% short of the P23-billion collection target.

Revenues from non-tax sources rose 8.9% to P309.7 billion, exceeding the P194.2-billion target by 59.41%.

“Although total revenue was growing 10.08% y-o-y, government must be prudent and careful about budget deficits and being able to do what was set to be done,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

For Mr. Asuncion, the fiscal deficit will likely exceed its ceiling again this year at 3.2% of GDP as the government is expected to provide fiscal stimulus to support economic growth this year, targeted to land within the 6.5-7.5% band. — Beatrice M. Laforga with Bloomberg

National government fiscal performance (December 2019)

Central bank mulls more rate, RRR cuts

THE CENTRAL BANK may cut rates by more than 25 basis points (bps) this year as the government looks to boost growth amid fears of an economic fallout due to the global spread of the coronavirus disease 2019 (COVID-19), its chief said on Thursday.

In a briefing at the central bank’s headquarters, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said they will reassess how the virus could hit the economy as the outbreak worsens, with more cases confirmed outside China.

“I’m not totally ruling out an additional cut of more than 25 bps this year. Definitely there will be another 25[-bp cut]. I’m not ruling out [a cut worth] 50 or 75 bps,” Mr. Diokno told reporters.

He, however, said he remains positive the economy will expand by six percent this year despite emerging risks.

“We are still confident that we will still hit six percent [growth]…” he said. “So there are many things that we should do while the whole world is in a mess…so that when all of these settle down, we’ll be in a stronger position again.”

The government targets 6.5-7.5% gross domestic product (GDP) growth for the year. The economy grew by 5.9% in 2019, a tad below the downward-revised goal of 6-6.5%.

The Monetary Board on Feb. 6 trimmed key policy rates by 25 bps, bringing the rate on the BSP’s reverse repurchase, overnight deposit and lending facilities to 3.75%, 3.25% and 4.25%, respectively.

Mr. Diokno said earlier this month that the central bank may cut rates by another 25 bps as early as the second quarter to help shield the economy from the impact of the fast-spreading COVID-19.

The central bank last year reduced key rates by a total of 75 bps. This partially unwound the 175 bps worth of hikes it implemented in 2018 to quell rising inflation.

“We’re lucky that we have both fiscal and monetary space,” Mr. Diokno said. “We might consider additional cuts in reserve requirements or in the…policy rate, but when that will happen, of course that will depend on our assessment of the situation and the conditions.”

The reserve requirement ratio (RRR) for big banks is currently at 14%, while those for thrift and rural lenders are at four percent and three percent, respectively, following 400 bps worth of cuts last year.

The BSP chief has vowed to reduce big banks’ RRR to the single-digit level by the end of his term in mid-2023.

Mr. Diokno earlier said COVID-19 could result in a 0.2% reduction in GDP growth if the virus lasts for a quarter or 0.4% if it persists for two quarters. He said growth may be hit by 0.3% on average in the first semester based on their preliminary analysis.

With the virus already affecting more than 80,000 people around the world, disrupting business operations in some countries and causing market jitters, Mr. Diokno said he has already instructed BSP Deputy Governor Francisco G. Dakila, Jr. to “revisit” these estimates.

Mr. Diokno said their previous analysis took into consideration the case of the Severe Acute Respiratory Syndrome (SARS) epidemic back in 2003. However, he said that China then is “much different from China now.”

“China now accounts for, I think, at least 30% of global growth if not higher,” he said.

BSP Monetary Policy Sub-sector Officer-In-Charge Dennis D. Lapid said in reviewing their analysis of the outbreak’s impact on the economy, they will consider data such as foreign direct and portfolio investments.

“Even with…what’s happening, we’re confident that we’ll still hit six percent this year. Because most of the things that we plan to do are not heavily affected by the coronavirus, like the ‘Build, Build, Build,’” Mr. Lapid, referring to the government’s massive infrastructure program. — Luz Wendy T. Noble

Inflation impact on the poor worsens in January

By Jobo E. Hernandez
Researcher

INFLATION, as experienced by low-income families, picked up to its fastest pace in six months in January, the Philippine Statistics Authority (PSA) reported on Thursday.

The inflation rate for the country’s bottom 30% income households clocked in at 2.3% in January, faster than the year-on-year inflation rate of 1.9% in December 2019, but slower compared to 5.2% in January 2019.

The latest reading, which was revised from the earlier-reported 2.6% last Feb. 5, marked the fastest clip in six months or since July 2019’s 2.7%.

This compares with the 2.9% headline inflation experienced by the average Filipino household in January that was faster than 2.5% in December, but slower compared to 4.4% in January last year.

The consumer price index (CPI) for the bottom 30% reconfigures the model basket of goods in order to reflect the spending patterns of the poor. This compared with the headline CPI which measures inflation as experienced by the average household.

This also marked the first time the bottom 30% CPI used 2012 prices as the base year. Prior to the rebasing, the bottom 30% CPI used 2000 prices.

The PSA noted higher annual increases in the following commodity groups: food and non-alcoholic beverages (0.7% from 0.2% in December 2019); alcoholic beverages and tobacco (22.4% from 22.3%); housing, water, electricity, gas, and other fuels (2.7% from 2.4%); transport (3.5% from 2.8%); communication (0.4% from 0.3%); recreation and culture (2.9% from 2.7%); and education (5.2% from 5.1%).

The food-alone index also posted an inflation rate of 0.6%, an increase from December 2019’s 0.1%.

Indices that remained unchanged during the month were clothing and footwear (2.8%); furnishing, household equipment and routine maintenance of the house (1.8%); and health (2.9%).

Bucking the trend was the restaurant and miscellaneous goods and services index, whose inflation inched down to 2.6% from 2.7% previously.

Poor households’ inflation in Metro Manila went down to 2.1% in January from 2.9% in December. On the other hand, those living outside the capital experienced inflation of 2.3% in January, higher than 1.9% the previous month.

“Clearly, the uptick may have come from the recent Taal Volcano eruption where there was a temporary increase in food prices coming from the areas immediately surrounding the volcano,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail yesterday.

Taal Volcano spewed a giant ash column on Jan. 12, covering large parts of Southern Luzon and cities near Metro Manila. The volcano is the country’s second-most active volcano and has been under Alert Level 2 since Feb. 14.

“We have also seen the increase in fuel prices due to the TRAIN law implementation last January. Most of all, there has been a diminished base effect since we have already seen much lower levels of annual increments last 2019,” Mr. Asuncion added, referring to the Tax Reform for Acceleration and Inclusion law.

The economist was referring to the implementation of excise taxes on petroleum products that took effect at the start of the year under the third and final tranche of the TRAIN Law. Under this tranche, additional excise taxes of P1 per liter for gasoline, P1.50 per liter for diesel, and P1 per kilogram for household liquefied petroleum gas (LPG) will be imposed.

Moreover, there will be an additional 12% value-added tax, bringing the total to P1.12 per liter for gasoline and per kilogram for LPG, and P1.68 per liter for diesel. On the other hand, stocks that are part of oil companies’ Dec. 31, 2019 inventories are not subjected to the additional excise taxes.

Looking forward, Mr. Asuncion said inflation in February is expected to be lower with the decline in global oil prices.

“Knee-jerk reactions of fear due to the COVID-19 (coronavirus disease 2019) outbreak may also have caused the slight dampening of consumption demand across food products,” Mr. Asuncion added.

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