Spike in prices seen after Labuyo

MANILA, Philippines -An uptick in the prices of goods is expected after Typhoon Labuyo battered Luzon earlier this month but inflation is still seen to settle within the central bank’s target range, the research unit of a leading bank said.

“If anything, the immediate impact of Typhoon Labuyo will more likely be felt in the prices of consumer goods,” Metropolitan Bank and Trust Co. said in a weekly report.

“It is expected that the domestic prices of commodities, especially of food, will increase as supply chains are disrupted due to shortages and delays in the production and transportation of goods.”

The spike in prices will be due to Labuyo’s damage to the agriculture sector, Metrobank noted.

Labuyo, also known by its international name Utor, intensified into a typhoon on Aug. 10 and hit mostly the Ilocos and Cagayan Valley regions, Central Luzon and Cordillera Administrative Region.

The National Disaster Risk Reduction and Management Council, in its Aug. 16 update on the typhoon’s effects, pegged the damage at P1.084 billion, bulk or P725.596 million of which were damage to crops, livestock and fisheries.

But Metrobank stressed that despite a slight hike in the prices of commodities, inflation is still expected to fall within the Bangko Sentral ng Pilipinas’ 3-5 percent target for the year.

“Nonetheless, the full-year average inflation rate is still seen to come in within the set target range for the year,” the research note read.

Inflation has averaged 2.9 percent in the seven months to July, lower than the full-year target range.

The central bank, however, still expects the rate to fall within the target range as BSP Governor Amando M. Tetangco Jr. earlier said the “well-anchored” inflation expectations provides room to adjust policy stance if needed.

The BSP, in its most recent policy meeting on July 25, kept the overnight borrowing and lending rates at 3.5 percent and 5.5 percent, respectively. The Monetary Board’s next rate-setting meeting will be on Sept. 12.