Favorable weather to help ease inflation, says Neda

While favorable weather is seen to help ease consumer prices, especially of food, in the near term, state planning agency National Economic and Development Authority (Neda) is urging the government to provide immediate support to farmers and fishers so they can confront climate risks that threaten their livelihoods.

In its latest inflation report, Neda said “weather conditions are expected to be generally favorable with the continued weakening of La Niña” and the transition to El Niño-neutral conditions starting this month until July, citing the forecast of state weather agency Philippine Atmospheric, Geophysical, and Astronomical Services Administration (Pagasa).

Neda, however, warned that eight to 11 typhoons might hit or develop in the Philippines from May to October. To recall, a string of strong typhoons before 2020 ended damaged agricultural produce, jacking up prices of vegetables and fruits.

“Farmers and fisherfolk can take advantage of the favorable weather forecast over the near term. To mitigate the adverse impact of the typhoons, the DA (Department of Agriculture) should remain vigilant in monitoring agriculture buffer stocks, providing credit assistance and agricultural support [such as seeds and livestock biologics] as needed,” Neda said.

Also, Neda said the government might have to beef up assistance for production inputs, production loans, and insurance payments.

“At the same time, long-term solutions such as investments in research and development for climate-resilient crop production, infrastructure development to improve water management, and irrigation systems may need to be pursued. Improving logistics, productivity, and resilience in agriculture through digital technology and improved local and international partnerships can likewise contribute to mitigating or avoiding the impacts of typhoons and drought,” it added.

Neda noted that rice prices had been declining due to a combination of higher domestic production and an influx of imports ensuring sufficient supply of the country’s staple food.

“Palay production improved in the first quarter due to increased harvest area and planting intentions. Moreover, despite the damage to rice supply brought by typhoon ‘Bising’, the timely arrival of imported rice supplemented domestic production. In April, an estimated 806,961 metric tons (MT) of imported rice arrived. This was equivalent to 50 percent of the volume issued with the sanitary and phytosanitary import clearance (SPSIC),” it said.

But in the case of meat, Neda said pork prices remained elevated as shipments were taking time to arrive, despite eased importation , due to the African swine fever (ASF) crisis. “For instance, shipments from Europe and the United States take an average of 45 to 60 days to arrive.”

The government earlier reported that meat inflation climbed 22.1 percent year-on-year in April mainly due to a 57.7-percent jump in pork prices.

Neda is nonetheless optimistic that the temporary reduction of pork tariffs and the increase of the MAV [minimum access volume] for imported pork will help in immediately easing pork inflation.

“With the persistence of the ASF, the government must continue to provide support through financial assistance, hog repopulation, and the initial rollout of ASF vaccine trials, while temporarily boosting imports to cover the shortfall and to allow domestic supply to catch up. Hence, it is necessary to reduce pork tariffs and increase the MAV for pork as limited supply may continue to push inflation higher,” it said.

Neda said “favorable” rice stocks as well as supplies of chicken, fish and vegetables augured well to easing food inflation the rest of the year.

In the case of fuel, it said “the government needs to remain vigilant to developments in the international oil market amid the tight oil supply and recovery in global demand.”

—Ben O. de Vera INQ