Inflation won’t erupt — BSP chief

Affirming what other economic officials said, the Bangko Sentral ng Pilipinas (BSP) downplayed any impact of the recent phreatic eruption of Taal volcano on inflation as it expected changes in commodity prices to remain on course over the year.

“It’s too premature, for (any) speculation so let's not give some numbers... Plus, if you do the analysis, we have to look at the general equilibrium. For example, if you lose some tourism in that area, you can bet that tourism will sprout in other areas,” Diokno said.

“Remember, the economy is about P18 trillion, so look at the numbers and in relation to the size of the economy... the impact of agriculture for example is not that large. It’s not enough to move inflation,” he added.

Also, the BSP chief said that conditions on the affected areas are improving as the government intends to reduce the alert level on the eruption.

“I think the government is now planning to reduce it from (alert level) four to three so things are getting better,” he said.

Assessment still positive

“I think NEDA (National Economic and Development Authority) has already made an assessment and so with the absence of any report on our part, we’ll go along with NEDA and it’s not gonna affect too much both the inflation and the growth path,” he added.

Finance Secretary Carlos Dominguez III said earlier that food production in other areas could offset whatever loss it may be from the areas affected by the volcanic eruption.

“Although Batangas produces some of the food for Metro Manila, I think the damage, although it looks very bad now, I think that will be overcome by the production of food in other areas. I don’t think it will affect the inflation rate very very much. I think there will be some effect but not that much,” Dominguez said.