Consumer prices may have increased at its fastest pace in nearly two years this November due to the tight supply of food and other commodities due to damage to farmlands and infrastructure caused by two recent typhoons.
The Bangko Sentral ng Pilipinas (BSP) said inflation could range between 3.3 and 4.1 percent for November due to the effects of typhoons Santi, which hit Northern and Central Luzon in October, and Yolanda, which devastated Eastern Visayas this month.
If the top end of the BSP’s forecast is reached, it would be the highest increase in consumer prices in a single month since inflation hit 4.2 percent in December 2011. The low end of the BSP’s forecast for the month would be the highest since February this year.
BSP Governor Amando M. Tetangco Jr. said inflation could continue to pick up in December “given the damage to agricultural production and disruptions in the supply distribution channels due to Typhoons Yolanda and Santi.”
“The BSP will continue to monitor the factors that affect movements in prices,” Tetangco said, refusing to give hints on the effects of the likely spike in inflation on monetary policy settings.
The BSP’s key overnight borrowing and lending rates are at record lows of 3.5 and 5.5 percent, respectively.
He said this was in line with the BSP’s primary mandate of maintaining stable consumer prices that promote economic growth and sustainable development.
Earlier this month, the BSP said inflation for the year might surge to 3.3 percent from the year-to-date average of 2.8 percent in October mainly due to the effects of Typhoon Yolanda. Next year, the BSP said inflation could reach 4.5 percent due to Yolanda’s effects.
These initial forecasts, while higher than the official projections of 3 percent for 2013 and 4 percent for 2014, were still within the BSP’s inflation target range of 3 to 5 percent for both years.
Earlier this week, Tetangco said the effects of the typhoons would likely be temporary, noting that prices might stabilize once conditions have normalized.