The Bangko Sentral ng Pilipinas expects inflation to slow down in the fourth quarter, even though the country can expect five to six more typhoons before the close of the year.
In an economic briefing, BSP Deputy Governor Diwa Guinigundo said inflation would peak in the third quarter and decelerate from October to December.
“The government’s approval of more rice importations would address any impact of weather disturbances on rice prices,” Guinigundo said.
Also present in the economic briefing were Finance Secretary Carlos Dominguez III, Budget Secretary Benjamin Diokno, and National Economic and Development Authority Director-General Ernesto Pernia.
Inflation in August rose to a nine-year high of 6.4 percent, faster than the 5.7 percent in July, due mainly to higher prices of food, particularly rice, fish, meat and vegetables. This brought inflation in the first eight months to 4.7 percent, well over the target range of 2 to 4 percent this year.
Guinigundo said the impact of Typhoon “Ompong” on inflation might be limited and confined in certain areas.
He said he hoped the rice tariffication bill, which would liberalize the imports of rice, would be approved by the fourth quarter and ease the impact that rice prices would have on inflation.
On Monday, Bangko Sentral Governor Nestor Espenilla Jr. said the Monetary Board was not looking at any off-cycle move amid the higher inflation environment but another strong monetary action remained on the table.
Espenilla was non-commital on the possibility of another 50 basis-point rise in interest rates at the next policy meeting on Sept. 27.
He said it was too early to tell the impact of Typhoon Ompong to the economy and consumer prices.
“Historically, typhoons cause disruptions in supply. But the impact tends to be localized and transitory,” he said.
President Rodrigo Duterte’s economic team has recommended to the National Disaster Risk Reduction and Management Council the declaration of a nationwide state of calamity to avail of a $500-million loan from the World Bank to be used for rehabilitation and recovery for the areas affected by Typhoon Ompong.
Dominguez said during the Philippine Economic Briefing held at the Bangko Sentral ng Pilipinas on Tuesday that the WB loan has “favorable terms and interest rates.”
“We recommended that proposal to the NDRRMC,” Dominguez said during the briefing.
Estimates from the government show that agricultural damage from the typhoon cost P14.27 billion, affecting more than half a million hectares of farmlands with an estimated production loss of 731,294 metric tons.
Reports from Cordillera Autonomous Region showed huge losses in rice, corn, high-value crops and livestock. The typhoon also claimed the lives of 66 people and around 138,000 people were displaced.
Dominguez said the economic cluster was awaiting the final assessment on the crops damage. He declined to comment on the impact the typhoon would have on the economy pending the receipt of the needed reports.
But Dominguez said if there were infrastructure projects affected by the typhoon, the government could handle an additional cost for these undertakings.
Pernia said NEDA will lead the planning for the rehabilitation of regions devastated by Typhoon Ompong last week that mostly affected Northern Luzon, particularly the rice-producing provinces of Cagayan and Ilocos Norte. With PNA
The Palace, meanwhile, said the peso is expected to recover when remittances from overseas Filipino workers peak by December this year.
Presidential Spokesman Harry Roque made this remark in response to a report by London-based Capital Economics that the peso is seen to weaken to P55 against the US dollar this year and further slide to P58 next year.
Reports showed that the peso has dropped by almost 8 percent against the dollar since the start of the year.
“We’ll see because the remittances are coming in for December so we remain confident that the peso can recover,” Roque said in a Palace briefing.
Roque said the peso becomes strongest in December because OFWs remit more than usual for their loved ones in the Philippines in time for the holiday season.
“Whatever the projection is, we’re confident that the peso will rally,” Roque said.
Last year, OFW remittances, the nation’s largest source of foreign exchange after exports, totaled an all-time high of over $28 billion.
According to the BSP, OFW remittances reached $2.401 billion in July this year, which is 5.2 percent increase from the $2.283 billion in the same period last year. Remittances mostly come from the United States, Canada, the United Kingdom, and Germany.
There are currently over 10 million overseas Filipinos worldwide. With PNA