Philippine central bank predicts higher inflation rate in June

Due to basic food items price hikes.

The Philippine central bank forecasts a median estimate for June inflation at 4.6 percent YoY, which is higher than May’s 4.5 percent, as food prices continued to rise that month.

According to a research note from Maybank Kim Eng, accelerating inflation in the Philippines is being cause by supply shocks and in response the government has taken several measures.

For instance, the country’s National Food Authority (NFA) has been allowed to import an additional 200,000 tonnes of rice this year from Vietnam, on top of the 1m tonnes of imports already planned for 2014.

Here’s more from Maybank Kim Eng:

Also, the National Economic Development Authority (NEDA) is considering allowing a free market in rice imports from the current state monopoly given to the NFA.

The NEDA director general pinpointed the cause of the shortage to “our approach in restricting rice imports without an adequate assurance that local rice production would be sufficient to meet demand.”

Domestic supply has suffered losses from the number and strength of typhoons in 2013. As for sugar, the Sugar Regulatory Administration has ordered the release of sugar meant for exports into the domestic market.

Meanwhile, the logistics gridlock that is resulting in port congestion will be addressed by various government agencies such as the Bureau of Customs, which will implement a 30-day limit for cargo to be moved, the Philippine Economic Zone Authority, which will process goods in ports 24/7, the Philippine Ports Authority, which will promote the use of Batangas and Subic ports as alternatives to Manila, and the use of strategic government properties as storage areas.