Bulk prices hit 7-year high in 2021
THE COUNTRY’S wholesale prices of general goods rose to their highest level in seven years in 2021 as lockdown restrictions further eased in the last two months.
The general wholesale price index (GWPI) eased to 4.1% year on year in December, from the 4.2% in the prior month and the slowest since October’s 3.9%, preliminary data from the Philippine Statistics Authority (PSA) showed.
However, the GWPI was quicker than the 2.4% seen in December 2020.
The GWPI is used to monitor the wholesale trade sector and serves as a basis for price adjustments in business contracts and projects.
The December print brought the full-year growth to 3%, the fastest pace since 3.5% in 2014.
The PSA said slower month-on-month price growth was seen in crude materials, inedible except fuels (6.7% from 17.2% in November); mineral fuels, lubricants, and related materials (26.3% from 34.2%); chemicals including animal and vegetable oils and fats (2.8% from 3.8%); and manufactured goods classified chiefly by materials (6.3% from 6.4%).
On the other hand, food price growth accelerated to 3.3% in December from 2.7% in November. Beverages and tobacco likewise increased to 5.7% from 4.8%.
Wholesale price level of machinery and transport equipment was unchanged at 1.4%.
By major island group, Luzon’s bulk prices eased to 4.1% in December from 4.3% the previous month, while prices in Visayas picked up to 2.2% from 1.4%. Bulk prices in Mindanao were unchanged at 5%.
For the entire year, bulk price levels in Luzon rose by 3.2% last year from 2.5% in 2020, while those in Visayas eased to 0.4% from 0.9% previously. Mindanao bulk prices climbed by 4.6% on average last year from 1.6% in 2020.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the rise in bulk price levels last year due to the further reopening of the economy.
Metro Manila and surrounding areas were under the less strict Alert Level 2 status from November to December amid declining fresh coronavirus disease infections.
“The further reopening of the economy towards greater normalcy towards the end of 2021, especially with the shift to nationwide Alert Level System or smaller scale/granular lockdowns since November 2021, helped increase production and supplies in the economy, thereby reflecting in the easing of the year-on-year GWPI,” he said in a text message.
However, Mr. Ricafort warned the continued rise in global oil prices could push bulk price levels higher in the first quarter. Crude oil prices have climbed since the start of the year, but soared past the $100 a barrel level in February after Russia’s invasion of Ukraine.
“For the coming months, proposals for higher transport fares and wages could potentially lead to risk of second-round inflation effects or higher prices of other affected products and services in the economy, which could also lead to higher GWPI,” Mr. Ricafort said.
The weaker peso-dollar exchange rate in early 2022 could also lead to higher import prices and overall inflation, he added. — Mariedel Irish U. Catilogo
