Rising oil, corn prices pose upside risks to PH inflation

Inflation concerns remain as upside risks such as normalizing global oil prices and rising corn prices threaten recent gains in bringing down food costs, the Department of Finance (DOF) said.

“While food price inflation eased, nonfood price inflation inched up from 3.21 percent in March to 3.84 percent in April. Base effects from energy prices on year-on-year inflation will continue to be felt in the coming months,” Finance Undersecretary and chief economist Gil Beltran said in an economic bulletin Saturday.

Citing World Bank data, Beltran noted that Dubai crude oil jumped 178.3 percent to $64.77 a barrel in April from only $23.27 a year ago—the lowest since December 2002.

To recall, global oil prices fell as demand plunged when many countries worldwide closed their borders at the onset of the COVID-19 pandemic early last year, hurting the trade, travel and tourism sectors.

As for food prices, especially of pork, Beltran is optimistic that “imports should be able to address the shortfall in domestic supply and help ease meat price inflation” mainly caused by the African swine fever crisis.

Last month, President Duterte issued Executive Order No. 128, which slashed tariffs and increased quotas to encourage more imports.

After the earlier price cap on meat lapsed last month, food prices climbed 22.1 percent year-on-year as pork prices jumped 57.7 percent, the Philippine Statistics Authority (PSA) reported last week.

“Preliminary PSA data show that hog ending inventory declined by more than 24 percent by the end of 2020. Hog repopulation will be the medium- to long-term measure to address the supply-side issue,” Beltran said.

However, Beltran pointed to another emerging problem for meat producers—“animal raisers in general may face higher production costs, as World Bank data show that the price of corn in the international markets rose to $268.23 per metric ton in April, the highest since August 2013.”

“Corn is an important input in animal feed processing,” he noted.