Rice inflation for the bottom 30% of Filipino households by income accelerated to 23.6% in September, up from 22.5% a month earlier, as weather disruptions and higher production costs weighed on the food supply, the Philippine Statistics Authority (PSA) said on Tuesday.

The bottom 30% price series matters because food — led by rice, the staple grain at the center of Filipino diets — takes up a larger share of spending in low-income households, so swings in staple prices translate quickly into cost-of-living pressure for this group.

Cereals and cereal products, a category that includes rice, accounted for roughly three-fourths of food's contribution to inflation for the lowest income segment.

Overall consumer price growth for the bottom 30% income group accelerated to 9% year on year in September from 8.2% in August, the highest level since February 2023.

Former Agriculture Secretary William D. Dar said supply remains the main driver of rice prices. "Well, the prices of rice, it's again governed by the law of supply and demand," he told BusinessWorld.

Mr. Dar warned that supply could tighten in the fourth quarter as El Niño, a climate pattern typically associated with reduced rainfall in the Philippines, progresses. "It has started and is progressing. And what's the impact of El Niño? There is no water. Without water, your food production will fall," he said. "There will be less supply (if we don't have adequate reserves of rice)," he added.

He noted that rising costs are hurting farmers, who are forced to rely on fuel. "Solar-powered irrigation systems are still insufficient. So I would consider it a perfect storm," he said.

The PSA said inflation for the poorest 30% of households was driven mainly by food and non-alcoholic beverages, where price growth climbed to 9.4% in September from 8% in August.

Prices of vegetables, tubers, plantains, cooking bananas and pulses rose 9% from 1.2% in August, while fruits and nuts came in at 8.9% from 6.4% previously. Fish and other seafood increased 8.4% from 8.1%.

"With so many typhoons, heavy rains, and severe flooding, vegetable and fruit production has been severely impacted," Mr. Dar noted.

By contrast, corn price growth slowed to 20% from 21.8%, and oils and fats declined to 6.8% from 7.3%. Meat prices fell 3.6%, against the August drop of 4.8%.

Mr. Dar said some regions were already feeling the early impact of El Niño, with more regions expected to start showing its effects after August. With supply identified by Mr. Dar as the key variable, how El Niño spreads across more regions through the fourth quarter — and whether rice reserves prove adequate — is the angle to watch in the PSA's upcoming inflation prints for the poorest households.

— BusinessWorld, with reporting by Moureen Ylessandra B. Dizon

Source: BusinessWorld