BSP warns El Nino may push food prices up
The Bangko Sentral ng Pilipinas warned that a stronger-than-expected El Nino weather disturbance could affect domestic food production and pose a risk to food prices.
“A strengthening of the ongoing El Niño weather disturbance could adversely affect production, potentially translating to higher food prices,” the BSP said in its 4Q2015 inflation report released on January 22, 2016.
“The said weather condition is expected to manifest as both drier-than-normal weather conditions and stronger-than-usual typhoons, which could impact negatively the planting season, ultimately posing a risk to food prices,” the report said.
Food prices increased by 1.3 percent in the fourth quarter of 2015 from the third quarter because of weather-related supply disruptions and higher demand during the holidays that pushed up prices of certain food items.
The central bank said retail prices of meat, fish, and vegetables were significantly higher in the fourth quarter of 2015.
Rice prices in the fourth quarter, however, fell from year ago levels despite lower local production because of rice importation. The central bank blamed the losses in rice output in the fourth quarter on typhoon Lando that ravaged northern and central Luzon, with losses amounting to P6.7 billion as of October 23, 2015.
Over the near term, however, the BSP said food inflation is likely to remain benign because of good harvest of key agricultural commodities. Global agricultural prices also declined in 2015 and could remain at moderate levels over the medium term, the report added.
While palay and corn production declined in the fourth quarter of 2015 because of typhoon Lando and dry spells brought about by the El Nino weather phenomenon, the BSP said production of the two crops may increase slightly in the first quarter of 2016 based on the planting intentions of farmers. (By: Eileen A. Mencias)