Inflation seen higher in October

MANILA, Philippines - Inflation is expected to have risen in October as food prices climbed due to the onslaught of Typhoon Santi, UK-based Barclays said.

In its latest Emerging Markets Weekly report, the bank said inflation could have settled at 3.1 percent last month, up from 2.7 percent in September and the four-year low of 2.1 percent in August.

Barclays said inflation is seen to rise on higher food costs as rice and vegetable prices rose on account of a typhoon, adding “with growth strong, we also expect service sector prices to continue to grind higher.”

Santi battered northern and central Luzon early October, destroying crops and agricultural infrastructure in the process.

Damage to agriculture has already amounted to P3.172 billion, while damage to other infrastructure summed up to P114.473 million.

The calamity also killed 15 individuals and displaced about 14,684 families, according to a National Disaster Risk Reduction and Management Council report.

But the bank noted “Meralco (Manila Electric Co.) adjusted electricity prices lower on account of cheaper hydro-electricity during the rainy season which should provide some offset.”

Meralco has earlier announced a 54-centavo per kilowatthour (kwh) rate reduction for October due to lower generation charges.

Barclays’ assumption is within the Bangko Sentral ng Pilipinas’ forecast range of 2.8 - 3.6 percent for October.