MANILA – Consumer group Laban Konsyumer, Inc. (LKI) expects this year’s inflation rate to surpass the government’s 2 percent to 4 percent inflation target.
In a statement, LKI president Victorio Mario Dimagiba said the consumer price index (CPI) will likely shoot above the 4 percent ceiling, mainly because excise taxes on petroleum products will be raised for a second time.
Dimagiba maintains that the oil excise tax is the main driver of inflation, and not the spikes in world crude prices. “Just as crude oil prices went high quickly in the third quarter of 2018, crude oil prices went down as fast in the fourth quarter, yet inflation had remained high and above the government target,” he said.
He also cited that inflation in December 2017 was only at 2.9 percent despite world oil prices rising to USD61 per barrel. This was the time before the government had implemented the Tax Reform for Acceleration and Inclusion (TRAIN) law, he explained.
However, when oil prices in the world market reached USD65 per barrel in November 2018, inflation jumped to 6 percent, the LKI head said.
Dimagiba said the excise tax on oil has a big impact on the cost of energy, transportation, manufacturing, and logistics among others, which will inevitably affect the prices of goods and services in the future. He added that the increase in the prices of products is being passed on to consumers.
“For every layer of the supply chain, which could be anywhere between five (and) seven layers, as well as in the production, manufacturing and transportation of basic necessities and prime commodities, these fixed taxes are passed on to the cost of the goods and services produced and sold at least five to seven times,” he said.
He stressed that the LKI will pursue its pending petition in the Supreme Court against the law.
Meanwhile, the Department of Energy (DOE) has expressed its support for slapping fuel products with an excise tax for the government to increase its collection to fund critical infrastructure projects and improve its social services.
The DOE assured the public that it will implement stringent monitoring of oil stocks and gasoline stations.
“The Secretary has been very clear – cooperate, don’t violate. We have been actively explaining and clarifying the implementation process for this second tranche,” DOE undersecretary Felix William Fuentebella said. (PNA)