The National Economic and Development Authority (NEDA) expects typhoons damage to rice could lead to faster inflation in early 2017, even as the government has kept inflation within the target range of 2 percent to 4 percent for the next two years.
"The volatility in rice prices could affect the overall welfare of the Filipino families, particularly the poor who spend around 20 percent of their incomes on rice," said NEDA Director-General and Socioeconomic Planning Secretary Ernesto Pernia.
Typhoons Karen, Lawin and Nina hit the country during the last quarter of 2016.
"Therefore, the government needs to promote more resilient practices for rice production to minimize the impacts of climate-related shocks," Pernia said.
For 2017 and 2018, the government expects inflation to be within the target range of 2.0 to 4.0 percent. This already considers the scenario of higher oil prices, pending petitions for adjustments in electricity rates, but especially, strong domestic economic activity.
"The inflation outlook is supported by the country's brisk domestic demand conditions, buoyed by solid private household spending, higher government expenditure, and adequate domestic liquidity," added Pernia.
Inflation in December 2016 slightly rose to 2.6 percent from 2.5 percent in the previous month, bringing full-year 2016 inflation to 1.8 percent.
"The uptick in inflation last month was caused by price increases partly due to the holiday season and supply constraints on some food items," said Pernia.
The full-year 2016 inflation of 1.8 percent is below the government's target range of 2.0 to 4.0 percent for the year, but higher than the 1.4 percent of 2015.
Food inflation for December 2016 increased to 3.7 percent from 3.5 percent in the previous month; and higher than the 1.8 percent in the same period in 2015.
Faster increases in the prices of bread and cereals, fish and meat were recorded.
Non-food inflation for December was pushed by transport and recreation and culture. The faster spike in transport costs can be attributed to the considerable increases in domestic petrol prices such as unleaded gasoline and diesel.
Core inflation, which excludes selected volatile food and energy prices, also inched up to 2.5 percent in December 2015 from 2.4 percent in the previous month.
Source: Philippines News Agency