March wholesale price growth at highest since 2011

WHOLESALE price growth of general goods in March continued to approach levels not seen in over a decade due to rising commodity prices in the wake of the Russia-Ukraine war and the latest lockdowns in China.

The general wholesale price index (GWPI) rose 7.6% year-on-year in March, accelerating from the 5.6% increase posted in February and the year-earlier 2.8%, according to preliminary data from the Philippine Statistics Authority (PSA).

The March reading was the highest since the 8.2% growth posted in Oct. 2011.

The GWPI tracks the wholesale trade sector and serves as a benchmark for price adjustments in business contracts and project costing.

Seven of eight commodity categories posted year-on-year price growth gains in March. The food index, with a 36.8% weighting on the  wholesale basket, accounted for 3.1 percentage points (ppts.) of GWPI growth after posting an 8.2% increase in March, accelerating from 4.9% in February.

Price growth in manufactured goods classified chiefly by materials rose 7.3% in March from 6.6% in February. This category had a 20% weighting on the basket and accounted for 1.4 ppts of GWPI growth.

Mineral fuels, lubricants, and related materials, with a 3.2% weighting on the wholesale basket, posted price growth of 45.3% in March from 37.7% in February. This category was responsible for 1.3 ppts. of GWPI growth.

Other commodities where price growth picked up were chemicals including animal and vegetable oils and fats (8.5% in March from 6.1% in February); machinery and transport equipment (2.4% from 1.9%); crude materials, inedible except fuels (29.2% from 26.7%); and miscellaneous manufactured articles (1.5% from 0.9%).

Price growth in beverages and tobacco eased to 4% from 4.1% a month earlier.

Wholesale price inflation in Luzon outpaced the national average with a reading of 8.2% in March, against a 5.9% reading in February and the year-earlier 2.9%. The March reading for Luzon was the highest since the 8.4% outcome in Nov. 2011.

GWPI growth in the Visayas picked up to 4.1% in March from 3.5% previously and the year-earlier decline of 0.6%. Price acceleration was the strongest since the 4.2% rise posted in Sept. 2011.

The gains in the Mindanao GWPI slowed to 3%, from the 3.2% in February. The March level was the lowest since the 2.8% posted in Jan. 2021.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa attributed the rise in bulk prices levels to the global increase in commodity prices.

“The ongoing Ukraine war is causing spikes in food and commodity prices. The slowdown in China is also affecting global supply chains,” Mr. Mapa said in an e-mail interview.

In February, Russia invaded Ukraine, sending global oil prices to multiyear highs on concern over sanctions on Russia, which might render it unable to export energy.

Meanwhile, China implemented in late March its most extensive lockdown since the beginning of the coronavirus pandemic, which disrupted global supply chains.

“GWPI trends point to a similar acceleration in CPI (consumer price index) inflation in the near term as global commodity prices edge higher,” Mr. Mapa said.

Headline inflation rose to a six-month high of 4% in March as price growth in food, utilities, and transport picked up.

In a separate e-mail, Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion attributed the growth to the reopening of the economy following the easing of quarantine restrictions.

“These numbers are reflecting the continuing re-opening of the economy. We think that pent-up demand is fueling demand across the board of the economy. We expect this to continue in the medium-term,” he said.

Since March, Metro Manila and other provinces have been under the most permissive form of quarantine, known as Alert Level 1, as new coronavirus cases continued to drop.

Mr. Mapa expects the trend to continue for the whole year.

“Expect GWPI and CPI inflation to sustain the upward trend for the rest of the year, whittling down purchasing power and increasing the cost of production,” he said. — Mariedel Irish U. Catilogo

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