THE latest inflation numbers revealed the vulnerability of a number of provinces to oil shocks, according to a deputy governor of the Bangko Sentral ng Pilipinas (BSP).
While headline inflation has come down to 6.2 percent in July, Zeno Ronald R. Abenoja, the Deputy Governor for the Monetary and Economics Sector of the BSP, emphasized that there is ‘unfortunately’ a wide distribution of inflation in the regions.
In Manila, Abenoja said inflation was around 5.5 percent in the past few months. However, in Central Visayas, he said the average inflation over the last three months spiked to over 10 percent.
Meanwhile, in the Mindanao region, the BSP deputy governor said inflation has been hovering around 8 to 9 percent in the past few months.
‘So there’s a lot of heterogeneity that we are observing,’ Abenoja said, adding the central bank’s observation that because transportation cost has increased ‘quite dramatically,’ that has affected some prices for food supply.
‘And this is something that the national government is looking at very carefully, making sure that the supply for food items remains adequate moving forward,’ added Abenoja.
The BSP official explained that some regions are performing ‘not as well’ as other regions because some are more oil-intensive than others, hence they suffer from faster increase in the prices of goods.
‘We’ve looked at, for example, Central Visayas. It’s a net importer of food and a lot of the commodities are either shipped or flown in from other islands,’ said Abenoja.
‘And because that’s an oil-intensive portion, or there’s a lot of oil and transport components in those commodities, then they get the adverse impact coming from that,’ the BSP deputy governor explained further.
As the central bank scrutinized the Mindanao region, Abenoja said the BSP found out that vegetables, meat, and cereals are what he described as ‘outliers,’ or commodities that posted ‘extraordinarily high’ inflation in the region.
‘So we ourselves are asking, what is really happening on the ground? Some of the feedback is that perhaps this is a food-producing region, but still it’s hit hard by oil prices,’ he said.
No control over anti-supply shocks measures
As he explained the central bank’s mandate, Abenoja stressed anew: ‘We do not do policies concerning directly such supply shocks.’
However, he said he heard from his colleagues in the government that they are bracing for the impact of oil shock, climate change, and the weather disturbance he dubbed as ‘Godzilla El Niño,’ which he said may be experienced for the remaining part of 2026 until early next year.
‘So if you can just recall the models, the models have recently updated their forecast and they seem to say that there’s a very good chance, at least 80 percent, that we will have a strong El Niño and the peak will be in the fourth quarter of this year and first quarter of next year. So again, that’s something that our government is looking at very carefully and has already started preparations [for]. So that hopefully can help mitigate the inflation pressures across regions, across the country,’ Abenoja said.
As for the other initiatives of the government, Abenoja said he heard that the government may be ‘looking at shifting the calendar for planting season, supporting water resources like irrigation, looking at drought-tolerant varieties of food, of crops, so that the food industry can maintain its productivity even in these adverse weather conditions.’
‘Risk factors’
During the Development Budget Coordination Committee (DBCC) briefing held last week, Abenoja said upcoming inflation forecasts of the central bank would have to take into account the recent ‘risk factors’ such as the recent global oil prices and the potential impact of El Niño, which may peak in the final quarter of 2026 until the first half of 2027.
BSP Governor Eli M. Remolona Jr. said during the same briefing last week: ‘We worry about inflation because it diminishes the purchasing power of Filipino families.’
While the central bank chief reported that inflation has eased somewhat over the last three months, he said inflation remains well above its target of 3 percent.