Rising rice prices push up October inflation rate


By Derco Rosal

 

The country's inflation rate rose to 2.3 percent from September’s four-year low of 1.9 percent due to soaring rice prices which jumped following recent calamities including Severe Tropical Storm (STS) Kristine and Super Typhoon Leon.

October's inflation pushed the 10-month average to 3.3 percent, remaining within the government’s target range of two to four percent, the PSA noted.

On Nov. 5, the Philippine Statistics Authority (PSA) reported that the national food inflation rate increased to 3.0 percent in October, up sharply from 1.4 percent in September.

This was largely driven by a sharp increase in rice prices, which climbed to 9.6 percent from 5.7 percent in the previous month.

“Recent weather disturbances, including Typhoon Kristine, have posed significant challenges to our food supply and logistics,” National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said in a statement.

Meanwhile, core inflation, which excludes certain food and energy items, held steady at 2.4 percent.

In a statement, NEDA said the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) forecasts that La Niña will persist until the first quarter of 2025, with two to eight tropical cyclones expected to affect the country until April 2025.

NEDA reported that Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) anticipates La Niña conditions to continue through the first quarter of 2025, with projections of two to eight tropical cyclones likely to affect the Philippines until April next year.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC) noted that higher rainfall is expected to boost agricultural and food production, following the official end of the El Niño drought in June 2024.

“However, any large storm, flood, or typhoon damage could cause agricultural losses,” Ricafort said, adding that it could temporarily drive up prices due to disruptions in output and supply until supply chains stabilize.

If agriculture remains unaffected by La Niña, inflation could stay around two percent for the remainder of 2024 and early 2025, Ricafort said.

This would support potential local policy rate cuts in line with expected U.S Federal Reserve rate cuts, Ricafort explained.

Meanwhile, the Bangko Sentral ng Pilipinas (BSP) said in its Nov. 5 statement that inflation pressures have increased for the next two years.

Inflation risks may rise due to possible increases in electricity rates and higher minimum wages in regions outside Metro Manila, the BSP said.

Thus, the “Monetary Board (MB) will maintain a measured approach in its easing cycle to ensure price stability conducive to sustainable economic growth and employment,” the central bank said.

Meanwhile, Balisacan assured that the government is actively working to ensure food availability and stable prices for essential commodities.

“With targeted support and streamlined food supply chains, we aim to ensure that food is affordable and accessible for Filipino families, especially those most vulnerable to price shocks when disasters hit us," Balisacan added.

Notably, the country’s inflation rate for the poor households continued to increase to 3.4 percent from 2.5 percent in September. The gap between this rate and the overall household inflation rate has increased further.

Last month, Balisacan stated that he anticipates a decrease in poverty due to the significant drop in inflation and the ongoing strength of the labor market in September.