Inflation likely settled between 2.4% and 3.2% in November on higher oil prices and crop damage caused by typhoons, said Philippine central bank Governor Benjamin E. Diokno on Friday.

“Higher domestic oil prices, as well as the impact of weather disturbances on the prices of rice and select agricultural commodities contributed to upward price pressures during the month,” he told reporters in a Viber group message.

Local oil prices rose by 50 centavos a liter for diesel and by 30 centavos for kerosene this month, according to the Energy department’s website, citing data as of Nov. 24.

Oil prices have fallen by P4.62 a litter for gasoline, P8.86 for diesel and P12.29 for kerosene this year, it said.
Crop damage from Typhoon Vamco, locally named Ulysses, has reached P4.18 billion, affecting 106,619 farmers and 106,489 hectares of land, according to the Agriculture department.

The storm followed four other typhoons and submerged many parts of Luzon island including the capital region this month.

Mr. Diokno said higher oil prices could be tempered by the stronger peso and lower electricity rates in areas served by Manila Electric Co. (Meralco).

Meralco has said the rate for a typical household went down by P0.0395 a kilowatt-hour (kWh) to P8.5105 this month, resulting in a net rate reduction of P1.35 a kWh since the start of the year.

The peso appreciated by 5.5 centavos to P48.06 against the dollar at the close of trading on Friday.

“Looking ahead, the Bangko Sentral ng Pilipinas (BSP) will remain watchful of economic and financial developments to ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” Mr. Diokno said.

The central bank cut its policy rates again by 25 basis points last week, bringing its overnight reverse repurchase, lending and deposit facility rates to record lows of 2%, 2.5%, and 1.5% respectively.

Inflation quickened to 2.5% in October from 2.3% in September, the fastest pace in three months.

The uptick was mainly due to faster increases in prices of food and nonalcoholic beverages, as well as in education, restaurant and miscellaneous goods and services.

Inflation has averaged at 2.5% to date, within the BSP’s 2-4% target. The central bank expects inflation to average at 2.3% this year.

The Philippine Statistics Authority will report November inflation data on Dec. 4. — Beatrice M. Laforga

Drought threatens food security and poverty in Southeast Asian countries including the Philippines because it damages agricultural land and hurts the incomes of small farmers the most, according to the United Nations Economic and Social Commission for Asia and the Pacifc (ESCAP).

Drought in much of Southeast Asia has been a recurring natural hazard and is expected to worsen in the coming years, with the poorest communities expected to suffer more, ESCAP said in a report published on Friday.

It noted that from 2015 to 2020, the region experienced the most severe droughts in decades that affected more than 210 million people at some point.

The Philippines was among the countries that posted the highest overall drought risks — a combination of exposure, vulnerability and the magnitude of the hazard — in October 2015 and in February this year.

“Projected changes in drought risk threaten to further exacerbate food insecurity by damaging agricultural land, planted crops and livestock health, and delaying planting seasons,” according to the report.

“These challenges are particularly disruptive for small-scale farmers, who have less capacity to cope with even small economic shocks, compared with large-scale commercial farming,” it added.

Because water is scarce during the drought season, small farmers take longer to collect water and have less time for other productive activities, ESCAP said. “This tempers the availability of food produced, that could push prices up, as well as disrupt agricultural livelihoods which would lead to lower revenues for the farmers.”
It said southern Philippines is among areas in the region suffering the most from frequent drought, along with Brunei Darussalam, Indonesia and Malaysia.

The most affected region in the country in terms of food security is Mindanao, which incurred damage worth more than $6.73 million to 5,730 hectares of rice and 15,416 hectares of corn.

“Worst affected were the poorest farmers, who had little savings to cope due to their exposure to repeated armed conflict and natural hazard,” ESCAP said.

In some provinces, more than 70% of farmers reported damage to crops and food shortages, with more than 60% of households forced to sell their assets, it added.

It found that some areas in the Philippines marked as drought hotspots also reported high poverty rates. These include the regions of Zamboanga Peninsula, Northern Mindanao, Davao and Caraga.

Aside from its impact on health and livelihoods, disruptions caused by droughts to the agriculture sector result in losses to economic output.

“Food security across Southeast Asia is threatened both by the ongoing drought and the COVID-19 pandemic,” ESCAP said. “The two disasters are converging at a critical time in agricultural crop calendars, during the harvesting and planting seasons.”

ESCAP said governments should start developing national drought plans to mitigate its impact.
“A strategic approach to drought risk management must be a coherent effort across the whole of society, and must include long term, proactive measures that incorporate climate change projections to mitigate intensifying drought risk,” it said. — Beatrice M. Laforga