The Philippines may experience temporary increases in food prices as a fifth of the Manila region remained under water today and rains battered some rice-producing provinces.
“We can expect some temporary spike in food inflation as there may also be some temporary disruption to the supply chain,” central bank Governor Amando Tetangco said in a mobile-phone message. “The impact of the rains over the past few days bears watching. The area affected by the rains is rather widespread.”
The worst flooding in three years engulfed about half of the metropolis yesterday, crippling transport links, prompting closure of schools and some offices and triggering panic buying. The deluge also hit the main island of Luzon, which produces almost half the nation’s rice. Costlier food, which accounts for 39 percent of the consumer price index, may stoke inflation that quickened to a six-month high in July, a report today showed.
The government imposed a price freeze on basic goods in areas under a state of calamity, Trade Secretary Gregory Domingo said in a phone interview today. The agency is monitoring costs and will issue a bulletin to guide the public, he said.
“We will impose fines on violators and there’s the possibility of closure for abusive retailers,” Domingo said. The price controls take effect immediately and could go on for as long as two months, he said.
Prices and supply remained stable except for fish and vegetables, after the highway linking Manila to vegetable producers in the northern provinces was flooded, Domingo said.
At least 19 people were killed on the island of Luzon and almost 400,000 fled their homes, according to police and disaster officials. The downpour was enhanced by the effect of Tropical Storm Haikui lashing China, the weather bureau said.
The agency raised its rainfall alert in the capital at 4:30 p.m. to the highest level after placing it on a yellow alert earlier today, the lowest in its three-step color-coded system.
The latest flood comes after Storm Saola earlier this month killed 53 people in the Philippines and damaged more than 400 million pesos ($9.6 million) worth of farm output and infrastructure, the nation’s disaster risk reduction agency reported on its website.
The damage caused by typhoons and other disasters in 2011 reached 59.2 billion pesos, Economic Planning Secretary Arsenio Balisacan told lawmakers this week.
After a delay of a day due to the flooding, the National Statistics Office said today inflation quickened to 3.2 percent in July from a year earlier, compared with a 2.8 percent in June.
Portions of the damaged crops are recoverable, Tetangco said today, adding that the central bank will continue to monitor price gains, as well as domestic and global developments to see if there’s a need to adjust its policy stance.
“Given information that we have now, our view remains the same -- that inflation over the policy horizon remains manageable,” Tetangco said. The monetary authority targets inflation to average 3 percent to 5 percent in 2012-2014.
The peso rose 0.1 percent to 41.79 per dollar at the close in Manila, according to Tullett Prebon Plc. The yield on the 4.625 percent July 2017 bond fell five basis points to 4.55 percent, data from Tradition Financial Services showed.