CV posts highest average annual inflation in 2016

CEBU, Philippines - Central Visayas posted the highest annual average inflation in 2016 among the regions in the country.

This according to the December inflation report released by the Philippine Statistics Authority, which also showed that consumer prices nationwide rose to a two-year high in December at 2.6 percent, up from 2.5 percent in November and 1.5 percent in the same month in 2015.

PSA attribute the higher increase to higher food and transportation costs.

"This was primarily due to higher annual increment recorded in the heavily-weighted food and non-alcoholic beverages index. Higher annual rates posted in the indices of transport and recreation and culture also contributed to the uptrend," PSA said.

The December rate was within the central bank's 2.2-3 percent estimate.

This brought the country's annual average headline inflation for year 2016 to pick up to 1.8 percent, up from 1.4 percent in 2015.

The average is within the Bangko Sentral ng Pilipinas' forecast average for the year but below its official 2-4 percent target set for 2016. 

Core inflation, which excludes select food and energy items, increased 2.5 percent in December 2016, up from 2.4 percent a month prior.

On Central Visayas, Efren Carreon, regional head of the National Economic and Development Authority, earlier said the region's inflation had been increasing consistently last year.

Among the provinces, Cebu recorded the highest inflation rate, he said.

In October alone, it posted a 4.5 percent inflation amid the rising costs of food and non-food items.

In his earlier outlook Maximo Eleccion, immediate past president of Cebu Bankers Club, warned that inflation may rise this year if the peso continues to weaken against the dollar, saying that fixed Filipino peso earners may be affected if the peso further weakens.

The bank official said that it may not be good also if the exchange rate goes up further as it will affect imports.

If that happens, import products sold locally may increase in prices, thus eventually affecting inflation rate, he said.

A weaker peso makes dollar-denominated goods and services more expensive in peso terms.

Upside pressures from foreseen increase in inflation include the expected rise in the prices of petroleum products, rice, and power rates, as well as the weaker peso.

The NEDA said that international and domestic risks are tilted upward from a possible rally in oil prices, depreciation of the peso against the US dollar, and pending petitions for electricity rate increases.

Some economists expected the central bank to raise its benchmark interest rate for the first time in more than two years in 2017 given the country's strong economic momentum and rising inflation outlook. (FREEMAN)