MANILA -- The current dry spell or "El Nino phenomenon" being experienced in the Philippines may be categorized as "mild" by meteorologists, but monetary officials still consider it as an upside risk to inflation, with the impact seen to last until 2020.
Citing PAGASA’s main outlook based on its heat map, Bangko Sentral ng Pilipinas (BSP) Monetary Policy Sub-Sector officer-in-charge Dennis Lapid, in an interview on Friday, said August would be about normal in terms of the volume of rainfall situation while it will be below normal from September to November.
“But the overall assessment is that it’s still relatively dry condition, which could also be good for agriculture because we are heading into the main harvest in October,” he said.
Lapid said the Department of Agriculture (DA) is penciling in about PHP8 billion worth of crop losses this year because of the dry spell.
He said BSP officials have incorporated this figure on their inflation assessment but said that “the risk that we’re looking at is it could extend into 2020.”
“So you have much dryer period in the first, early part of 2020 and heading into the summer months. That could also impact on (the) 2020 (inflation rate),” he said.
Lapid clarified that while they consider the dry spell as among the upside risks to the domestic rate of price increases “we don’t see it as huge risk given that this is a mild episode.”
“We’re not seeing (it as huge risk). We don’t have reports of very large impact,” he said.
Lapid also said the situation is expected to be better this time around because the government has liberalized rice importation.
Last February, President Rodrigo R. Duterte signed into law Republic Act (RA) 11203, otherwise known as the Rice Tariffication Act, which ended the quota system for rice traders.
This law was aimed at ensuring adequate rice supply in the country, with the help of imports, to prevent another spike in the prices of this basic Filipino staple just like what happened last year when inflation hit 6.7 percent in September and October.
Since its peak last year, rate of price increase has decelerated to 2.7 percent last June, although it posted an uptick to 3.2 percent in the previous month from three percent last April.
Monetary officials continue to see management of inflation rate this year, with the full-year average seen to be around 2.7 percent, at the lower half of the government’s two to four percent target until 2020. (PNA)
