Philippines: BSP sees little inflation risk from El Nino

  • Inflation will not zoom past target in 2019 despite threats of a dry spell, a senior central bank official said, citing ample buffer stocks of rice to keep price hikes at bay.
  • As of Jan. 10, the Philippine Atmospheric, Geophysical and Astronomical Services Administration was projecting a 65% chance of an El Niño to “form and continue” between Mar 19 and May 19. The weather bureau is currently on an “El Niño watch.”
  • Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said that out-quota importation approved by the National Food Authority (NFA) Council in Nov 18 will ensure that there will be no supply problems for the staple in 2019.
  • Mr. Guinigundo added that removing restrictions on the private sector from bringing in rice is expected to slash retail prices of the stable by up to PHP7 per kilogram and headline inflation by as much as 0.85%.
  • The central bank expects the overall pace of price increases to ease further in 2019 to average 3.1%, while monthly readings are seen to return to below 4% as early as Mar 19. Jan 19 inflation clocked in at 4.4%, better than market expectations.

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