MANILA: Inflation likely spiked to between 4.9 percent and five percent this month, reflecting the continuing market adjustment to the first package of the tax reform program and a confluence of other factors such as power rate hikes and fluctuating oil pump prices, an economist said yesterday.
Ateneo de Manila professor Alvin Ang expects inflation this month to accelerate due to the power rate hike implemented in two tranches from February to March, as well as the fuel price adjustments during the period.
This compares with the February inflation figure of 4.5 percent – the highest in over three years – still using 2006 as base year.
As the market adjusts, people are expected to adjust their spending patterns and producers of goods and services are also seen adjusting their level of production to what is acceptable to consumers.
Other than the transitory impact of the TRAIN law – that imposes higher excise tax alongside the lowering of income tax – another reason for the fast acceleration of inflation since the beginning of the year is the failure of the government to communicate to the public the benefits of TRAIN beyond having higher disposable income for consumption.
