In January 2018, consumer prices surged to a three-year high. In fact, last month’s inflation rate was the fastest since October 2014’s 4.3 percent according to the Philippine Statistics Authority.
“The uptrend was primarily due to the higher annual increment in the heavily-weighted food and non-alcoholic beverages index as it accelerated by 4.5 percent from previous month’s growth of 3.5 percent,”
“Moreover, the index for alcoholic beverages and tobacco registered double-digit annual mark-up at 12.3 percent in January 2018 from 6.4 percent in December 2017,”
TRAIN is to blame
Given the data that was produced by the PSA, economists say that there are no other explanation about the surge but the newly implemented TRAIN law.
University of Asia and the Pacific Senior Economist Cid Terosa is certain that the tax reform package that was implemented last January was the reason.
“There is no other major explanation given that January is usually characterized by slow or weak demand,”
Hard to believe
However, Finance Secretary Carlos Dominguez III does not believe that the reason for the three-year high surge is the TRAIN law.
“I have to look at the figures closely but find it hard to believe that the implementation of TRAIN… had any significant effect on prices,”
“Unless of course merchants took advantage of the law & raised prices on old inventories,”
In the middle
After those that agree and don’t comes Socioeconomic Planning Secretary Ernesto Pernia who believes that the push in inflation was “partly” due to the said TRAIN law.
“With the initial inflationary effects of TRAIN, we must ensure faster provision of financial assistance through the unconditional cash transfer program,”
In a statement, Banko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said that these are just temporary drivers of inflation and would soon stabilize.
As such, the BSP will closely monitor the situation.
“We think these are temporary drivers of inflation and would eventually stabilize,”
“Nevertheless, the BSP will be closely monitoring the situation and stand ready to take timely action based on our evaluation of all relevant data,”