DAVAO CITY (MindaNews / 02 March) – It’s not the tax reform law but profiteering by some businesses, among other reasons, that caused an increase in the year-on-year inflation in January this year, Finance Undersecretary Karl Kendrick T. Chua said.
Chua said in a press briefing at the Malacañan Palace on Thursday that the implementation of package 1 of the Tax Reform for Acceleration and Inclusion (TRAIN) was unlikely the reason for the 3.95-percent inflation rate between January 2017 and January 2018.
He explained that most firms are selling food and non-food goods bought in 2017 yet and that the consequence of higher excise tax has not translated into inflationary effect yet.
“Sa tingin namin (what we’re seeing), there is no reason for TRAIN to be the cause for the slightly higher inflation. And if there is, it would be other factors and profiteering might be a reason, because we have already seen some evidence of it,” he said.
Despite the increase in the prices of goods, Chua assured there’s no cause for alarm as the 3.95-percent inflation rate was considered “moderate” and still within the 2 to 4-percent target of the Bangko Sentral ng Pilipinas.
“And what makes the January a little higher is that the base effect is present. Meaning, in January 2017, the inflation was quite low at 2.7 that is why there is room to grow the price,” he said, explaining TRAIN’s estimated contribution to inflation would be 0.7% at the maximum.
He said the inflation rate was still “very low and stable,” as the country has suffered from sudden increase in prices from 10 to 20 percent, and to as high as 50-percent.
He said the inflation rate in the National Capital Region was 5.45 percent while it was 3.53 percent in other regions where most of the poor and the low-income workers reside.
On the 7.2-percent inflation in petroleum products, Chua said the spike was not caused by the tax reform but rather by the 1.5-percent depreciation of peso and the cost of Dubai crude which increased by 19.6 percent.
“So iyong main message is, if these products that are affected by TRAIN hardly increased and the only reason why petroleum increase is Dubai crude, and all other products increased, there must be something else that’s driving the increase and not TRAIN,” he said.
He said the prices of rice increased by only 1.4 percent but that for the prices of fish to climb by 10 percent was alarming.
He attributed it to the typhoon that landed in December 2017 and the closed season for big fish varieties from November to February.
“I would like to assure the public that this TRAIN has been well studied, well consulted, and the inflation is very well manageable. We have also other ways to help the poor in case inflation goes up higher. We have the conditional cash transfer. We have the rice subsidy. We have, under the TRAIN, the unconditional cash transfer. And we are pursuing rice tariffication so that rice price will fall, by NEDA’s statement, by up to 7 pesos per kilogram,” he said. (Antonio L. Colina IV/MindaNews)