Stable consumer prices seen, says planning chief

Saturday, February 11, 2012

THE National Economic and Development Authority (Neda) reported that prices of consumer goods and services are within the government’s target of three to five percent in 2012.

The public, however, should stay on guard for incidental factors that could trigger unstable prices on consumer goods and services such as typhoon-related effects and oil prices increases, Neda said.

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Neda noted that state weather forecasters confirmed the presence of weak to moderate La Niña, which will only dissipate between March and May of 2012.

Heavy rains caused by La Niña destroy major agricultural areas and infrastructures that eventually lead to increasing food prices.

Neda also reported that adjustments in the international price of oil affect domestic prices when producers and distributors of goods and services use it as a primary input.

Planning Secretary Cayetano Paderanga Jr., who also heads Neda, said while a weak external demand is being anticipated in 2012, oil prices are still expected to be higher than in 2011.

The oil price hike is due to geopolitical uncertainties in the Middle East, particularly caused by Iran’s threat to close the Strait of Hormuz in response to a possible European Union oil embargo, said Paderanga.

Pump prices have gone up a couple of times since January due to fears of supply shortage should tensions between the United States and Iran escalate over Hormuz, a narrow passageway for ships carrying petroleum from major oil-exporting countries in the Arabian Peninsula.

Moreover, Paderanga said inflationary pressures from wage hike should also be expected as most wage orders were implemented in 2011 under the Labor Code of the Philippines.

The inflation rate, computed using the 2006-based consumer price index of the National Statistics Office (NSO), slowed down to 3.9 percent in January 2012 from 4.2 percent in December 2011.

Factors that led to the lower inflation rate are slower uptick in prices in food and non-alcoholic beverages, transport alcoholic beverages and tobacco, and health, among others.

The drop in retail prices of food, particularly vegetables and fish, and lower upward price adjustments in transport-related commodities such as diesel supported the continued deceleration in inflation rate. (Virgil Lopez/Sunnex)