THE eruption of Taal Volcano could stoke inflation rate to as high as 3 percent at the start of the year, a Philippine National Bank (PNB) economist said.
In a report released on Wednesday, PNB chief economist Jun Trinidad highlighted the local bank was sensing a macro downside risk from the effects of the natural disaster and would take its toll on inflation rather than on domestic demand that could undermine growth prospects.
“While income and food price shocks arising from ND (natural disaster) events do not last given import channels and return to normal business/production in the affected regions, the recent ND effects bolster a 2020 inflation trajectory that’s likely to break out of the 2-2.5 percent range and perch at 3 percent year-on-year if not more, to kick start 2020,” he said.
Trinidad’s projection compares to the 2.5 percent average inflation rate in 2019.
He mentioned Taal eruption may put pressure on food prices of livestock, particularly chicken and hogs, as well as fish supply since Region 4 or Calabarzon is a significant contributor to local production of livestock.