Inflation stands at 3% in 2013

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) NewsBriefs, a regular publication produced by IDEA, year-on-year headline inflation for 2013 was at 3.0 percent, still within the 4.0 percent ± 1.0 percent point target for the said period and lower than the 3.2 percent inflation in 2012. As expected by economists, headline inflation in December rose to 4.1 percent, up by 0.7 percent from 3.3 percent recorded in November. Meanwhile, core inflation rose from 2.8 percent in November to 3.2 percent in December, posting a 0.4 percent increase. This is however, lower than the 3.7 percent core inflation recorded in 2012. Annual inflation in the National Capital Region (NCR) increased to 2.6 percent in December from 1.9 percent recorded in the previous month, while inflation in areas outside NCR rose t0 4.6 percent from 3.8 percent in November.

Per IDEA, increase in inflation was driven by mark-ups in food, electricity, and domestic petroleum products’ prices. The food index rose by 5.0 in December from the previous month, resulting in an annual average inflation for food and non-alcoholic beverages to increase to 2.8 percent from 2.4 percent in 2012. Alcoholic beverages and tobacco index increased to 29.8 percent. Electricity prices were driven by the maintenance shutdown of the Malampaya natural gas facility while increased in gasoline, diesel, LPG and kerosene prices influenced the uptick in non-food inflation.

Per same published report, the Department of Finance (DoF) expressed the government’s interest to lower the share of interest payments in the national budget to 12 percent by 2016. Currently, interest payments comprise 14 percent of the national budget, down from the 20 percent at the start of the Aquino administration. Finance Secretary Cesar Purisima attributed the decline to better macroeconomic fundamentals in the country which allowed it to receive investment grade ratings from credit rating agencies. Traction in reforms is also expected to drive the decline in interest paid on the country’s debt. As a result, funds can be used for more “productive purposes.”

Furthermore, the peso hit PhP44.70 per dollar, down by 5 centavos from previous week’s PhP44.65. Compared to its closing value in 2013 which was at PhP44.395 per dollar, the peso lost 30.5 centavos. Depreciation started since January 2 due to expectations of a stronger US jobless claims. Moreover, negative data from China increased pressures of depreciation. Other Asian currencies such as the South Korean won, the Thai baht and the Indonesian rupiah fell against the dollar.

Lastly, the Department of Labor and Employment (DOLE) in Central Mindanao did not impose a wage increase in 2013. This resulted from the lack of petitions for a wage hike from both the laborers and employers. Workers will receive the wage schedule set last 2012- non-agricultural workers’ minimum basic daily wage is PhP270 plus a PhP10 living allowance, plantation agricultural workers will receive PhP252 while non-plantation agricultural workers will receive PhP249. Instead of a wage hike, the labor sector complained of the difficulties in the implementation of the 13th month pay according to the researchers of IDEA.

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