SOCIOECONOMIC Planning Secretary Ernesto Pernia said Tuesday that granting the petitions for power price hike could be a risk to inflation, which hit 1.8 percent in August.
The August inflation was slightly lower than the 1.9 percent in the previous month.
Pernia said there is a need to ensure that prices of utilities such as electricity and water are stable.
"Existing petitions for upward adjustment in power prices should be reviewed comprehensively as it remains an upside risk in inflation rates," he said.
Manila Electric Company (Meralco) has a pending petition to implement a P4.15 per kilowatt hour power rate hike. The Energy Regulatory Commission has approved Meralco's petition in 2013, but the Makabayan bloc in Congress questioned this before the Supreme Court.
Pernia, who is also the National Economic and Development Authority (Neda) director general, said another risk to inflation is the possible effect of La Nina, which may begin developing in the fourth quarter of the year.
With the August inflation, the official said the government expects full-year inflation to be close to the lower end target of 2.0 to 4.0 percent.
Food inflation slowed down to 2.5 percent in August from 2.8 percent in the previous month. This was due to slower price adjustments of meat, vegetables and corn, which tempered higher prices of rice, fruits, sugar, and non-alcoholic beverages.
According to Pernia, "food inflation will stay stable given ample supply of palay and corn, which could keep upward price pressures at bay. Moreover, the plan to import more rice through next year will add to the country’s buffer stock and ensure that overall food prices remain stable."
However, rice inflation slightly increased to 0.5 percent in August from 0.0 percent in the previous month. This could be attributed to the decline in rice production and low levels of stock in the country due to El Nino, Typhoon Nona during the 4th quarter of 2015, and the northeast monsoon rains last January.
Also, the non-food group registered higher inflation of 1.1 percent in August from 0.9 percent in the previous month. This was driven by stronger price pressures of housing, water, electricity, gas and other fuels, transport, furnishings, household equipment, clothing and footwear, health, as well as restaurants and other goods and services.
However, the reduction in electricity charges observed in August was negated by higher global oil prices due to a pickup in global oil consumption and slowdown in crude oil production. (SDR/Sunnex)