BSP, economists: Price pressures back
Typhoons caused agricultural damage amounting to over P4 billion, according to the Department of Agriculture or DA.
Daily TribuneTyphoons caused agricultural damage amounting to over P4 billion, according to the Department of Agriculture or DA.
The Bangko Sentral ng Pilipinas, or BSP, believed inflation likely accelerated in August, ranging from 4.8 percent to 5.6 percent due to higher food and transport costs.
Inflation stood at 4.7 percent in July as prices of fuels and sugar declined.
However, BSP on Thursday said in a statement that higher prices of rice last month likely pushed up overall food inflation as the country was hit by typhoons "Egay" and "Goring."
Typhoons caused agricultural damage amounting to over P4 billion, according to the Department of Agriculture or DA.
The increased rice prices also came after India, the world's top rice exporter, banned selling non-basmati white rice overseas.
"While the Philippines sources less than 5 percent of its rice from India, Vietnamese and Thai rice accounts for more than 90 percent of total imports," AP Securities said.
Rice as inflation gauge
The firm said prices of rice jumped by at least 10 percent to P62 per kilo in the Philippine market.
"If local prices would eventually mirror the export prices on the world market, that would translate to nearly 30 percent year-on-year increase, which would snap inflation's seven-month downtrend and likely send headline inflation back above 7 percent," AP Securities said.
Aside from costlier rice, BSP said higher train fares and road toll coupled with peso depreciation possibly contributed to the projected faster inflation last month.
Foreign exchange rate yesterday stood at P56.725 to $1 dollar, which made imported goods more expensive and emerged among the highest in nine months, based on the data from the Bankers Association of the Philippines.
However, BSP said the August inflation might have been tempered by lower energy prices.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said fuel costs for running power plants remained among the cheapest over a year and a half.
Nicholas Mapa, senior economist of ING Manila, warned any upward tick in fuel prices can push up costs of a range of commodities, especially on heavy oil-importing countries like the Philippines.
"We have identified three key items in the consumer price index basket, namely rice, electricity and transport, which combined account for 23.41 percent of the total. For the most recent inflation episode, the crucial three accounted for 41 percent of inflation for 2022, highlighting the importance of stabilizing price movements for these key commodities," he said.
Mapa said uncertain conditions from the persisting war between oil-exporting countriesUkraine and Russia threatens to increase fuel prices.
"Going forward, the BSP will continue to monitor developments affecting the outlook for inflation and growth in line with its data dependent approach to monetary policy formulation," the central bank said.
