El Niño dry spell seen to prolong consumer price risks in PH

MANILA  -Factors that may contribute to high food inflation in the Philippines appear to be still firmly rooted as the El Niño climate phenomenon could prevail through the country’s hottest months into 2024.

According to the latest bulletin from the United States-based Climate Prediction Center (CPC), there was an 80 percent chance that El Niño would continue through March to May next year.

This latest forecast horizon and the probability quoted suggest that the phenomenon that brings dry spell to the Philippines may last until at least midyear in 2024.

The CPC forecasting team “favors at least a ‘strong’ event with a 75 percent to 85 percent chance [of such an occurrence of El Niño through November to January,” the American agency said.

‘Historically strong’

“There is a three in 10 chance of a ‘historically strong’ event that rivals [the El Niño occurrences in) 2015-16 and 1997-98,” CPC added.

In their respective latest monthly bulletin, the Food and Agriculture Organization (FAO) of the United Nations said its benchmark for international food commodity prices was “broadly stable” in September.

The main FAO Food Price Index, which tracks monthly changes in the international prices of globally traded food commodities, averaged 121.5 points in September, compared with 121.4 points in August.

READ: World food price index falls back to two-year low -FAO

“At this level, the index is 10.7 percent below its value a year ago and 24 percent below its all-time high reached in March 2022,” the UN agency said.

In September the FAO Cereal Price Index rose 1 percent from the previous month, due to a 7-percent increase in international maize prices.

Food price pressures

Meanwhile, the FAO All-Rice Price Index dipped by 0.5 percent amid generally low import demand.

Generally subdued import demand slightly lowered international rice prices, amid lingering uncertainties regarding India’s rice export policy and progressively thinning supplies in various exporters,” the FAO said, referring to New Delhi’s ban on outbound rice shipments.

“In most countries monitored by FAO, domestic staple food prices in September 2023 remained above their year-earlier levels,” the agency said.

The FAO also said the prevailing El Niño was raising concerns over prospects for the 2023 to 2024 crop production in parts of Asia.

READ: PH prices of key goods seen staying up

Further, the FAO Sugar Price Index had increased by 9.8 percent from August, reaching its highest level since November 2010 amid increasing concerns over a tighter global supply outlook in the upcoming season.

The FAO noted that early forecasts pointed to production declines in Thailand and India, both key producers, associated with the prevailing El Niño event.

On the other hand, the FAO Meat Price Index dipped by 1 percent from the previous month, with a mixture of weak import demand and ample global export availabilities pushing down quotations for pork, poultry and sheep.

In the Philippines overall inflation increased for the second month in a row to 6.1 percent year-on-year in September.

READ: PH inflation rose to 6.1% in Sept as food prices, transport cost soared

The Philippine Statistics Authority attributed this to the upswing in the heavily weighted food and nonalcoholic beverages to 9.7 percent, from 8.1 percent in August.

Faster food inflation was mainly due to the higher growth of prices for rice—17.9 percent in September from 8.7 percent in August. INQ