BSP weighs typhoon impact on inflation

The Bangko Sentral ng Pilipinas (BSP) is set to assess the impact of the damage caused by Typhoon Lando on inflation.

BSP Governor Amando Tetangco Jr. said the central bank would assess the impact of the recent calamity on consumer prices as soon as it receives a report from the Department of Agriculture.

“We have not yet received the assessment from the Department of Agriculture.

Once we get that assessment, we will do an estimate of the potential impact,” he told reporters on the sidelines of the 2015 Public Governance Forum organized by the Institute for Solidarity in Asia and Institute of Corporate Directors.

Inflation eased to a new record low of 0.4 percent in September from 0.6 percent in August on the back of stable food prices and lower utility rates.

This brought the average inflation to 1.6 percent in the first nine months from 4.4 percent in the same period last year. The rise in consumer prices in from January to September is below the two percent to four percent target set by the BSP.

“But you know inflation is very low, 0.4 percent. So we have enough room in terms of the target. It is not an issue,” Tetangco said.

The latest inflation forecast of the BSP is set at 1.6 percent for this year, 2.6 percent for 2016, and three percent for 2017.

The DA has pegged the initial losses caused by Typhoon Lando at P5.9 billion after damaging 277,060 hectares of farmland in northern Luzon.

Destroyed by the disaster were P5.28 billion worth of palay; P528.9 million worth of high value crops including vegetables and fruits; P84.4 million worth of corn; and P517,560 worth of livestock.

“We will have to recalculate our inflation path to see how it is affected by the recent developments particularly on oil and then the impact of this latest natural calamity,” Tetangco said.

The BSP has kept interest rates steady for the eighth straight policy-setting meeting since October last year. After raising key policy rates by 50 basis points last year, the BSP has kept the overnight borrowing rate steady at four percent and the overnight lending rate at six percent.

The next policy- setting meeting of the BSP’s Monetary Board is on Nov. 12.

BSP deputy governor Diwa Guinigundo earlier said inflation is expected to bottom out as the impact of the prolonged and severe El Niño weather condition and the weak peso is expected to kick in.

“Based on our latest forecasts, we should see inflation bottoming out on account of the impact of El Niño and weak peso,” he said earlier.