Philippines: Impact of swine fever on inflation seen minimal
MANILA (Philippine Daily Inquirer/ANN) - The Duterte administration’s top economic manager expressed concern that the outbreak of the African swine fever in the Philippines could push prices higher in the country.
The Duterte administration’s top economic manager on Monday expressed concern that the outbreak of the African swine fever in the Philippines could potentially push prices higher in the country, but stressed that any broader inflationary impact would be tempered by the availability of meat alternatives.
In a message to reporters, Finance Secretary Carlos Dominguez III acknowledged that the government’s confirmation of the presence of the virus—which is not known to pose a health risk to humans— was “a concern.”
“But there are substitutes to pork such as poultry, beef and fish,” he said.
The outbreak will adversely impact the Philippines P260-billion hog industry, but is unlikely to cause a spike in the country’s consumer price index that, though heavily weighted in favor of food items, gives only a small percentage to pork.
According to data from the Bangko Sentral ng Pilipinas, fresh, chilled or frozen meat— which includes pork, poultry and beef—account for only 4.8 percent of the economy’s inflation basket. In contrast, rice accounts for 9.6 percent of total inflation across the economy, based on the government statistics office’s 2012 price base.
Other traditionally volatile CPI components are fresh, chilled or frozen fish (4.3 percent), vegetables cultivated for their fruit (0.9 percent), vegetables cultivated for their roots (0.6 percent), corn (0.6 percent), and petroleum and fuels (2 percent).
On Monday, Agriculture Secretary William Dar said dead pigs found in some backyard farms in the Philippines tested positive for African swine fever based on the results of laboratory tests of local samples analyzed in the United Kingdom.
The Agriculture department estimated the total Philippine swine population at 12.7 million head, of which eight million pigs are raised in rural backyards while 4.7 million are from commercial farms.
To date, the country has banned pork and pork-based products from Belgium, Bulgaria, China, the Czech Republic, Germany, Hungary, Latvia, Laos, Moldova, Mongolia, North Korea, Poland, Romania, Russia, South Africa, Ukraine, Vietnam and Zambia.
This latest development has yet to affect the outlook of monetary authorities, which are still on an easing mode after tightening money supply substantially last year in response to an inflationary spike, caused primarily by high rice and fuel prices, aggravated by a tax hike.
In fact, the policy-making body of the Bangko Sentral ng Pilipinas believed that prices of basic goods and services would remain benign for the rest of this year and next, and possibly even more so in 2021.
The biggest inflationary threat that monetary planners fear right now are potential increases in the cost of electricity or transportation as well as the looming hike in taxes for alcohol.
The latest inflation rate stands at 1.7 percent for August, the lowest in nearly three years.