The rate of increase in food prices is expected to decelerate in the remaining months of the year as farmers begin to harvest crops this early in the season to ensure ample supply for the public.
The Bangko Sentral ng Pilipinas (BSP) said the ample supply of food, particularly of the country’s staple rice, would help tame the overall rise in consumer prices and support economic growth.
“Commercial rice prices have been on an uptrend in recent months, reflecting largely the increase in prices associated with the onset of the lean season,” the BSP said in a report on supply-side developments during the third quarter. “Typhoon damages and alleged price manipulations also contributed to the increase in rice prices.”
Citing data from the Bureau of Agricultural Statistics (BAS), the BSP said rice output likely declined in the third quarter due to insufficient water supply, intense heat and heavy rains during the July to September period.
The agriculture sector’s output in the second quarter fell 0.3 percent, BAS data showed. This was a reversal from the 0.6 percent growth recorded in the same quarter the year before.
The dip in second quarter output was due to the contraction in the production of corn, banana and sugarcane. This was partly offset by higher output in the mango, poultry and livestock subsectors.
However, the BAS expects the country’s agriculture sector to recoup lost ground in the fourth quarter, driven by the strength of palay production.
Palay production, the BSP pointed out, would likely grow at a faster pace this year than it did the year before.
The central bank said food prices would help keep inflation stable for the rest of the year, despite upward pressures on rice prices stemming from the threat of fresh conflicts in the Middle East that could affect the global supply of oil.
Inflation for September stood at 2.7 percent—faster than the 2.1 percent the month before. This brought the year-to-date average to 2.8 percent, which was still lower than the BSP’s target range of 3 to 5 percent.