BSP on guard vs inflation risks amid El Niño

The Bangko Sentral ng Pilipinas (BSP) is closely watching the impact of El Niño on inflation, particularly on second-round effects, as inflation likely picked up for the second straight month in March.

- KEISHA TA-ASAN

BSP Governor Eli Remolona Jr. said the drought caused by the El Niño weather event could impact rice prices, as these salient prices tend to stand out among households and affect their inflation expectations.

“Because of that, we have to monitor rice prices – mainly rice prices (but) there are other commodities affected by El Niño,” he said. “Because rice is so dependent on water, we have to monitor their effect on expectations.”

The amount of damage to agriculture in eight regions has reached P1.75 billion as the El Niño phenomenon intensifies, an official from the Department of Agriculture said.

The damage covered 32,231 hectares of farmlands, with at least 29,437 farmers displaced.

The BSP chief said headline inflation likely further accelerated to 3.9 percent in March from 3.4 percent in February due to base effects, but lower than the 7.6 percent in March 2023.

If realized, inflation would be near the upper end of the two to four percent target range of the BSP.