Inflation threat from rice prices to keep BSP hawkish

Resurgent rice prices continued to highlight the Philippines’ delicate economic condition, which should prompt the Bangko Sentral ng Pilipinas (BSP) to stay hawkish in order to prevent inflation from adding more damage to growth, ING Bank said.

Inflation for rice, the main staple in the Philippines, rose 15.8 percent year-on-year in November after easing to 13.2 percent in the previous month, which showed the “vulnerability to supply-side shocks,” Nicholas Mapa, senior economist at ING Bank in Manila, said in an emailed commentary.

Government data showed the average price of regular milled rice jumped to P46.73 per kilo in November from P45.42 kilo per kilo in the preceding month.Meanwhile, well-milled rice cost P51.99 per kilo on average last month, higher than October’s P51 per kilo.

That rice prices went up at a faster rate in the wake of peak harvest season showed the volatility of food supply in the Philippines.

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That said, Mapa believes the BSP will stay hawkish, “possibly extending its pause well into 2024” to keep inflation expectations in check. INQ