By Beting Laygo Dolor, Contributing Editor
A sudden rise in the cost of food coupled with a rise in transportation costs caused inflation in the country to rise to a 22-month high last month.
The Philippine Statistics Authority (PSA) said this week that inflation had reached 3.5 percent in the last month of 2020, up from the previous month’s 3.3 percent, and a full percentage point higher than the 2.5 percent for the same period in the previous year.
The figure is the highest since March of 2019.
The December 2020 figure was at the high end of the Bangko Sentral ng Pilipinas’s projection of between 2.9 percent and 3.7 percent for the period.
“The main reason for the faster inflation in December is the uptick in the rise of prices of food and non-alcoholic beverages,” said Claire Dennis Mapa, national statistician of the PSA.
Mapa said the higher inflation was expected due to the Christmas and New Year celebrations “with the demand for food and alcoholic and non-alcoholic products.”
But Mapa added that prices could be expected to taper off this month.
Even consumers have noted the high prices of goods, particularly vegetables which rose by almost 20 percent between November and December.
Meat prices, meanwhile, rose by 10 percent in the same two-month period.
Bangko Sentral ng Pilipinas Gov. Benjamin Diokno sought to allay the public’s fears of runaway inflation by saying that the December figure was “largely transitory, reflecting the short-term impact of weather disturbances.”
He told local media this week that the overall balance of risks to future inflation “continues to lean toward the downside owing mainly to the continued uncertainty caused by the pandemic on domestic and global economic activity.”
The effects of global warming also placed the global economy at risk, including the Philippines, which faced weather disturbances unusual for the season.
In October and November, powerful typhoons hit the main island of Luzon causing significant damage to crop.
Besides the global coronavirus pandemic, the country has been facing other weather disturbances such as a series of earthquakes in the last several months.
One of the biggest challenges is to lessen the effects of the ongoing La Nina weather phenomenon, which is expected to persist until March of this year, based on a forecast from the Philippine Atmospheric, Geophysical, and Astronomical Services Administration.
Recall that this time last year, Taal volcano in Batangas province erupted, sending tens of thousands to leave their homes. Throughout 2020, even as the pandemic raged, many parts of the Philippines were struck by typhoons and subsequent floods.
“The imminent threat of natural calamities every year highlights the need for long-term solutions such as infrastructure investments that would improve flood control, water management and irrigation systems, reforestation, climate-resilient production and processing facilities,” said Chua.
Despite the spate of negative influences, the situation was not as bad as expected, with the Philippines’ average inflation rate for 2020 pegged at 2.6 percent, or a fraction above the 2.5 percent average for 2019.
Last year’s average inflation is within the two to four percent target range of the government for 2020. Still, the government needs to keep a tight watch on the prices of goods.
Karl Kendrick Chua, acting socio-economic planning secretary, said: “Even with the low inflation environment, there is still a need to improve supply chain efficiency to ensure that prices of essential goods and services remain stable.”
The Philippines is also hoping for a strong recovery for the global economy after a number of companies began to release vaccines for the Covid-19 virus, which could hasten a return to normalcy by the second half of the year.