The Philippine central bank is modelling a severe El Niño alongside an oil shock as inflation hits a three-year high. Officials say the worst price effects may come between November and February.
01Summary
- 01Bangko Sentral ng Pilipinas Governor Eli Remolona said the bank is using policy scenarios that factor in oil prices and the severity of El Niño.
- 02Philippine inflation rose to 7.2% in September from 6.1% in August, according to the Philippine Statistics Authority.
- 03Rice prices were up 18% in September, and the country is the world's biggest rice importer.
- 04The central bank raised its benchmark rate by 25 basis points to 5% in August.
- 05HSBC economist Aris Dacanay expects another 25 basis point rise next week to 5.25%, followed by another in December.
02Why it matters
Higher inflation and possible further rate rises can affect borrowing costs, consumer spending and food prices in the Philippines. The risk also matters more widely because the country is a major rice importer and a demand shock could affect global rice markets.
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