Inflation picks up to 3.5% amid rising food, fuel prices

INFLATION accelerated to 3.5 percent in January, the highest in four months, fueled by rising food and fuel prices, the National Statistics Office said Friday.

Last month’s inflation was higher than December’s 3 percent and was also the highest since the 3.5 percent recorded in September last year.

Still, it was lower than the inflation rate of 4.3 percent in January 2010.

“If you look at the risks moving forward, the central bank will have to move to keep inflation in check,” Jonathan Ravelas, a strategist at Banco de Oro, told Bloomberg.

Borrowing costs would rise by half a percentage point beginning in June, he said.

Excluding selected food and energy items, core inflation further slowed down to 3.3 percent in January from 3.4 percent in December, the Statistics Office said.

Inflation in Metro Manila also went up to 3.9 percent in January from 3.4 percent in December. Prices rose fastest in Southern Tagalog and Central Mindanao at 4.2 percent, and slowest in Eastern Visayas at 2.3 percent.

Worldwide, food prices have hit their highest level on record in January, the United Nations’ Food and Agriculture Organization said.

The agency’s Food Price Index rose for the seventh month in a row to reach 231, topping the peak of 224.1 last seen in June 2008. It is the highest level the index has reached since records began in 1990.

“The new figures clearly show that the upward pressure on world food prices is not abating. These high prices are likely to persist in the months to come,” said Abdolreza Abbassian, an economist for the Rome-based UN agency.

Rising food prices have been cited among the driving forces behind the recent popular revolts in North Africa, including the uprising in Egypt and the toppling of Tunisia’s long-time president Zine El Abidine Ben Ali.

In response, some countries are increasing food imports and have built stockpiles to meet their domestic needs. With AP and Bloomberg, Elaine R. Alanguilan