October inflation seen under control despite typhoon-induced supply woes

MANILA, Philippines — Typhoons that damaged crops and disrupted food supplies unlikely prompted inflation to accelerate that much in October, thanks to lower oil and water prices, the central bank said on Friday.

Inflation likely fell between 1.9% and 2.7% this month, economists at the Bangko Sentral ng Pilipinas (BSP) projected. Last month, inflation averaged 2.3% year-on-year, falling within BSP forecast.

Official data on October inflation will be released November 5.
In making the assessment, the central bank said “weather disturbances” could have pushed up select prices of food products due to tight supply. Two storms consecutively entered the Philippines this month, traversing northern Luzon provinces where the bulk of crops distributed elsewhere are harvested.

According to disaster agency figures, tropical storm Pepito, which left as a typhoon, caused P105.82 million worth of agriculture damage, particularly in regions I to Calabarzon as well as the Cordillera Administrative Region.

Shortly after Pepito, typhoon Quinta entered a little bit down South, hitting Central Luzon, Calabarzon and Bicol regions. Infrastructure damage from the calamity was estimated at P290.06 million.

Food accounted for 29% of the basket of goods and services used to compute inflation so supply constraints as a result of weather disturbances may have significant impact on prices. 

Apart from food, the central bank said price increases in cooking gas as well as electric bills of Manila Electric Co. (Meralco)’s customers have also pushed inflation up. Oil companies hiked cooking gas prices by P1 per kilogram this month, while Meralco added P0.12 per kilowatt hour.
 
On the flip side, BSP said price decreases elsewhere would have tempered inflation. “These could be partly offset by lower prices for gasoline, diesel and rice as well as downward adjustments in water rates of Manila Water- and Maynilad-serviced areas,” the central bank said.

According to energy department data, oil firms rolled back diesel prices by P0.25 per liter and kerosene by P0.15 per liter on their latest adjustment last October 27. Manila Water Company Inc. and Maynilad Water Services Inc., meanwhile, decreased charges by P0.33 and P0.06 per cubic meter, respectively.

“Looking ahead, the BSP will remain watchful of economic and financial developments to ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” BSP said.