- Philippine central bank warned that drought-linked disruptions could drive inflation higher.
- BSP said rice, vegetables, fruit and fish among the commodities facing upward price pressure.
- The Department of Agriculture reinforcing preparations to protect food supplies and prices.
Weather-related risks remain a key threat to the inflation outlook, especially for staples such as rice.
It projected August 2026 inflation to land between 5.5 and 6.5 per cent.
“Upward price pressures are likely to be driven by higher rice, vegetable, fruit and fish prices, partly due to unfavourable weather, and elevated domestic fuel costs,” it said.
BSP raised its key policy rate by 25 basis points on August 28 in a pre-emptive move against persistent inflation.
In response to the inflation risks, the Department of Agriculture (DA) is strengthening its preparations.
On August 30, Agriculture Secretary Francisco P. Tiu Laurel Jr. said the DA and its agencies had been told to update response strategies as weather, crop, water and market conditions evolve.
The aim is to minimise the impact of drought on food production, supplies and prices.
Proactive measures
According to the agriculture minister, the department is acting early to secure food supplies before weather disruptions trigger shortages and price rises.
Measures include improving irrigation, adjusting planting schedules, securing farm inputs, monitoring inventories and preparing market interventions, including imports if needed.
The DA is also looking to shift production to areas expected to be less affected by dry conditions.
“We have to produce more where the impact of El Niño will be less severe, increase water available to farmers, and use every drop wisely through alternate wetting and drying and less water-intensive crops,” he said.
The DA is also expanding cloud-seeding and solar-powered irrigation, distributing drought-tolerant seeds, offering crop insurance indemnification and extending emergency aid to vulnerable farmers.
Recent struggles
The warning reflects the previous El Niño episode, which tightened food supplies and lifted prices.
Global rice markets were also hit by concerns over reduced production and export restrictions by India, one of the world’s largest rice suppliers.
FAO said its All Rice Price Index rose 21 per cent in 2023, driven by fears over El Niño’s impact on output and India’s trade curbs.
For the Philippines, the threat is heightened by the agriculture sector’s recent struggles.
Rice production fell 4.85 per cent year on year in 2024, partly due to adverse weather, leaving supply more vulnerable to another prolonged dry spell.
“The lessons we learned from the powerful El Niño episode that ended in mid-2024 should help us respond better to the climate challenge we now face,” said Tiu Laurel.
