Philippines: Disappointing inflation numbers

PHILIPPINES - In Brief 04 Apr 2024 by Diwa Guinigundo

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As we write this In Brief, the Philippine Statistics Authority is about to announce the inflation rate for March 2024 tomorrow at 9 am. We expect a higher inflation rate than January’s 2.8% and February’s 3.4% at slightly below 4.0%. This, to us, is a foregone conclusion because very little progress has been seen in ensuring sufficient food supply in the Philippines even as monetary policy remains tight. Maintaining a hawkish monetary policy is appropriate. While the Department of Agriculture has assured the market that rice supply will be sufficient through the first half of this year through higher imports, it also admitted that “rice prices may stay elevated through September this year due to concerns over El Niño’s impact on global rice supply and heightened demand for the grain.” Early last month, the country’s National Disaster Risk Reduction and Management Council reported that the dry spell had so far affected 23,000 farmers and fisherfolk and damaged around 18,000 hectares of crop areas. More and more provinces reported severe dry spell.  El Niño is expected to bring havoc until May, or even after. Profiteering could also pose additional problems. True, the Philippines is to import 3.8 million metric tons of rice in the Philippines for its over 110 million population mainly from Vietnam following the signing of their recent five-year rice supply agreement. But agriculture officials also warned against potential profiteers who may attempt to “exploit the situation by using El Niño as an excuse to hoard rice supply to push local prices to unreasonably high levels.” That is a police matter which should be addressed squarely. Rice is a game changer in the inflatio...