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September 27, 2022

Elevated prices seen persisting on food, non-food items

Although the easing in food price inflation canceled the impact of the increases in non-food prices in February, the pressure for commodities prices to heighten down the line remains, fiscal officials said on Monday.

“While the general price level did not rise as much as expected, the economy continues to face inflationary pressures from both food and non-food items,” the Department of Finance (DOF) said Monday on price levels averaging unchanged in February at 3 percent.

Prior to the release of the price survey in February, the market consensus was for inflation to average at least 3.2 percent during the month.

The DOF said the lingering impact of the African swine fever (ASF) on meat products continues to threaten food security in the country and made more complicated by the ongoing conflict between Ukraine and Russia.

“The country needs to repopulate decimated hog populations and momentarily supplement any shortfall with meat imports,” the DOF said.

It also said non-food price inflation will continue to be driven short-term by events in the global energy market that have pushed non-food price inflation higher to 4.14 percent in February from only 3.77 percent.

“Higher energy prices in the world market ultimately get translated into higher local pump prices. However, it would be a policy mistake to suspend fuel excise taxes as this would mean “subsidizing the rich”, the owners of gas guzzlers and air-conditioned houses.

“As previously stated, the more equitable and transparent, hence appropriate, means to cushion the impact of higher pump prices is through targeted support to vulnerable groups,” the DOF said.

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