No backlash on prices seen from typhoons—BSP

Inflation for October is expected to remain within target despite the country being hit by two successive typhoons, BSP Deputy Governor Diwa Guinigundo said.

The government has yet to report on estimated losses from typhoons Karen and Lawin, which both devastated mostly northern Luzon provinces.

Guinigundo said in terms of the typhoons’ impact on rice prices, it is not expected to post increases since supply remains ample as the government has secured the importation of about 250,000 metric tons from Vietnam and Thailand, 170,000 metric tons of which should have been delivered last September.

He said importation of another 250,000 metric tons of rice is awaiting approval.

“So all we need to do is to activate the standby arrangements and pursue the government-to-government importation of 250,000 metric tons,” he said.

Domestic supply is expected to remain enough as the main harvest season starts in October, Guinigundo said.

He explained that even with the onslaught of the typhoons, farmers have the chance to recover most of their harvest because they only need to have this dried later on.

He said the government has been implementing measures to support the farmers through the introduction of more storage and drying facilities.

“I hope those initiatives in the past, which were part of mitigation measures that the Department of Agriculture and the NFA (National Food Authority) have done, including NIA’s (National Irrigation Authority) focus on irrigation as well as water impounding facilities, would have materialized at this time. Hopefully, there would be no significant impact on inflation, considering that rice accounts for 9 percent of the consumer basket,” he added.

The BSP reported the uptick of average inflation rate in the third quarter of the year to 2 percent from quarter-ago’s 1.5 percent because of higher prices of food and non-food items.

However, monetary officials said inflation remains benign since average rate in the first nine months this year stood at 1.6 percent, lower than the 2 percent to 4 percent target for the year until 2018.

Last September alone, the rate of price increases rose to 2.3 percent from month-ago’s 1.8 percent. It was the first time the inflation rate went back to within-target levels since falling to 1.6 percent in May 2015.

Guinigundo said the faster inflation rate last September is within their projection of faster but within-target levels in the second half of the year, as a result of weather-related disturbances, among others.

The BSP projects 2016 inflation to average at 1.7 percent while it is 2.9 percent for 2017 and 2.6 for 2018.