Food prices main driver of October inflation of 7.7%–a 14-year high

Inflation

EXPENSIVE food items pushed the country’s inflation to its highest level since the rice price crisis 14 years ago and may continue doing so this month, according to the Philippine Statistics Authority (PSA).

PSA data showed inflation reached 7.7 percent in October, the highest since December 2008 when inflation hit 7.8 percent, which also coincided with the onset of the Global Financial Crisis.

The inflation of food and non-alcoholic beverages was recorded at 9.4 percent nationwide and accounted for 80.9 percent of the increase in the country’s inflation print for October. Food inflation alone is pegged at 9.8 percent.

“[The] situation right now [in]  October, particularly inflation. Is largely fueled by food inflation. Our food inflation [at the] national level is 9.4 percent and [we know that the] weight of the food basket in our national basket is quite high, it’s about 35 percent,” National Statistician Claire Dennis S. Mapa said in a briefing on Friday.

Mapa added that inflation for food was the highest in the National Capital Region (NCR) or Metro Manila at 12.1 percent, followed by the Davao region at 12 percent; Central Visayas, 11.3 percent; Mimaropa, 10.3 percent; and Caraga, 10.2 percent.

The increase in food items in NCR was due to more expensive vegetables owing to Typhoon Karding, while the transportation hikes also contributed to the increase in commodity prices.

“So these are the regions with double-digit food inflation. So food is really the one that pushed inflation for this month,” Mapa added. Speaking partly in Filipino.

Mapa also said the rise in commodity prices has not peaked and there was “substantial probability” that inflation would be higher next month.

Part of what will be factored in this increase is the impact of Typhoon Paeng which, based on the November 3 bulletin from the Department of Agriculture, caused P2.86 billion worth of damage.

The damage affected 80,295 farmers and fishers, with volume of production loss at 116,291 metric tons (MT) and 86,574 hectares of agricultural areas.

These areas include the Cordillera Administrative Region, Cagayan Valley, Central Luzon, Calabarzon, Mimaropa, Bicol, Western Visayas, Eastern Visayas, Zamboanga Peninsula, Central Mindanao, and Soccsksargen regions.

Normally, Mapa said the impact of typhoons on food items is short. But based on the data, the impact of typhoons is “wide,” affecting not just vegetables but other items such as fish which increased by around 9 percent.

“There’s a substantial probability of increase; in other words, it’s not certain that this is already the peak primarily because we will be experiencing upward movement from the data on food prices and the team noted that we had an increase in LPG recently so that would [be] factored in,” Mapa said. “Since the increases are coming from the different subgroups, it may not be easy to bring this down.”

Cash transfers, agriculture

Socioeconomic Planning Secretary Arsenio M. Balisacan said the national government is closely monitoring the inflation and possible inflation pressures.

This surge in prices, the National Economic and Development Authority said, resulted from external price pressures, like the Russia-Ukraine war and lockdowns imposed in parts of China which disrupted global supply chains, and the lingering aftermath of recent typhoons, including Typhoon Karding that hit the country in late September.

Given the damage to property, lives and livelihood from the recent typhoons, Neda underscores the importance of immediately providing assistance to those affected, while building the resilience of families, communities and production sectors.

“Our immediate priority is to continue supporting the most vulnerable sectors of the economy, hence, the cash transfers and fuel discounts will continue. This will alleviate the effects of the sustained increase in commodity prices as a result of global headwinds as well as the recent typhoons which damaged our domestic production and disrupted food supply,” Balisacan said.

Noting that the country incurs huge losses every year due to weather disturbances and other disasters, the medium-term strategy is to invest in innovations and appropriate technologies and systems to make the economy and communities resilient.

Equally important is the need to improve the governance structure for managing water resources and, at the same time, mitigating the risks from water-induced disasters.

These strategies will be elaborated in the upcoming Philippine Development Plan 2023-2028.

“It’s high time that we boost support for the agriculture sector not only in post-disaster recovery, but more importantly through preemptive measures. To sustain productivity and resilience, climate-adaptive agricultural technologies should be put in place and value chains strengthened,” Balisacan said.

“In addition, one of the priority legislative measures of the President is the creation of the Department of Water Resources that will oversee the use and supply of water, and mitigate the risks of water-induced disasters,” he added.

Image credits: Junpinzon | Dreamstime.com



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