'La Niña may help ease food inflation'

The potential impact of La Niña could help lower food prices across Southeast Asia, including the Philippines, possibly prompting central banks to be more aggressive in cutting interest rates later this year, according to Capital Economics.

- By KEISHA TA-ASAN

In a report, Capital Economics said La Niña, a weather event associated with above normal rains, could provide good growing conditions for crops in the region and put downward pressure on food prices.

“Our view is that central banks in the region will begin cutting interest rates later this year. La Niña increases the odds that easing cycles will be even more aggressive than our forecasts, which are already more dovish than the consensus,” Ankita Amajuri, assistant economist at Capital Economics, said.

Citing the World Meteorological Organization, Amajuri said there is a 70 percent chance of a La Niña between August and November, which could provide support for producers of rice, coffee and sugar as these commodities have been negatively affected by the dry spell over the past semester.