FINANCE Secretary Carlos G. Dominguez III doubts that Taal Volcano’s eruption would significantly put pressure on the country’s inflation rate.
Dominguez, who heads the Economic Development Cluster, made the remark a day after a local economist said Taal Volcano’s unrest is not expected to pull down the country’s economy this year but it could stoke inflationary pressures in the coming months.
“I don’t think it will affect the inflation rate very, very much. I think there would be some effect but not too much,” Dominguez told reporters on Thursday on the sidelines of an event in Makati.
Although he said Taal’s location is a big area for industrial development, he pointed out that most of the items there are being exported.
“The real problem is how the people are affected, their lives and the health also of the people,” he said, noting the harmful effects of the volcanic ashfall.
Philippine National Bank economist Jun Trinidad earlier said Taal’s eruption could put pressure on food prices, particularly on chicken, hogs, fish, since Region 4A—the region most affected by the calamity—is a significant contributor to local production of livestock.
Trinidad said the region is the second-largest regional producer of live chicken, accounting for 87,000 metric tons out of the total 429,000 MT in the third quarter of 2019.
On Tuesday, the Department of Agriculture (DA) said the eruption has damaged some P600 million worth of crops and other produce.
The losses could even increase in the coming days due to the probable fish kill in Taal Lake caused by the volcano’s eruption.
DA also reported that Taal Volcano’s damage to the farm sector rose to P577.59 million, from the agency’s initial estimate of P74.55 million.
The Philippines ended 2019 with a 2.5-percent uptick in inflation in December, from 1.3 percent recorded in November.
Even before Taal’s eruption, inflation has already been flagged to trend upwards in 2020 due to local and global developments.
The government’s target inflation range for 2020 remains at a range of 2 to 4 percent.
In 2019, inflation averaged at 2.5 percent.