Gov’t urged to monitor prices of commodities due to Middle East tension

Anti-war protest in Washington DC. (Photo courtesy by Axios)

MANILA, Philippines – “The government should closely monitor the price movements of various commodities following the recent US-Iran deal. We hope that events in the Middle East can affect local oil prices and that in turn, could lead to rising prices in the country, Senator Win Gatchalian said on Wednesday.

“To ensure that investors do not exploit the situation in the Middle East, we call on the Department of Energy, the Department of Trade and Industry, and the Department of Agriculture to appoint people or to develop a task force that will actively monitor the movement. price of petroleum products and commodities in the market” said Gatchalian.

Gatchalian said the Philippine Statistics Authority (PSA) had indicated that the inflation rate rose 2.5% last December compared to November of 2019.

“This is slightly higher than our internal forecast of 2.1% and national economists’ forecast of 2%.,” Gatchalian said.

For his part, Senator Ramon “Bong” Revilla prayed for the safety of Filipinos in Iraq.

“Let us all first and foremost pray for the safety of our kababayans in Iran, Iraq and the Middle East,” said Revilla.

“While we are praying that tensions will no longer escalate, it is best to be prepared for the worst. May binuo nang Crisis Committee, and contingencies are in place.   Nananawagan tayo sa ating mga kababayan sa mga apektadong lugar na maging alerto at aware sa mga ipatutupad ng ating pamahalaan para sa kanilang kaligtasan. Push comes to shove, I ask our Overseas Filipino Workers (OFWs) and Overseas Filipinos (OFs) to cooperate with authorities for their safety,” said Revilla.

“Pangunahing konsiderasyon ang kaligtasan ng bawat isa. Wala nang mas importante pa diyan. Tsaka na tayo mag-briefing after everything is in place and working na.   As we move forward, I remind everyone that now is a time for unity. Let us all work together to ensure the well-being of our kababayans,” he said.

Latest inflation

Meanwhile, the latest inflation rate is in line with the Department of Finance’s expectation of 1.8% to 2.6% for December 2019, he said.

The peso is seen taking a hit from escalating tensions between the United States and Iran as oil becomes more expensive.

BDO Unibank Inc. chief market strategist Jonathan L. Ravelas said he expected the local currency to trade within the range of 51 to 51.25 against the dollar after closing at 51.09 versus the greenback last Friday.

Ravelas noted that the peso’s close last week was a “far departure” from end-2019’s 50.635:$1 as “the Philippines’ energy import bill will soar with the surge in crude prices in the wake of the airstrike in Iraq.”

The US attack on Jan. 3 killed top Iranian commander Qasem Soleimani, prompting Iran’s government to express moves to avenge his death.

Global oil prices climbed by more than 4 percent after the airstrike at Baghdad airport amid investor worries on the US-Iran conflict’s impact on the commodity’s supply.

ING Bank Manila senior economist Nicholas Antonio T. Mapa said the brewing tension in the Middle East “forced broad risk-off tone with the peso retreating with safe-haven assets such as the dollar back en vogue.”

“Crude oil prices naturally spiked on possible supply tightness, which exacerbated the peso’s retreat as more expensive oil translates to increased demand for the dollar,” Mapa said.

Also, given the substantial deployment of overseas Filipinos in the region, the threat of a possible disruption in remittance flows threatened the supply side for dollars and its concurrent boost to domestic spending, thus slowing GDP [gross domestic product] growth at least marginally, Mapa added.

The latest Philippine Statistics Authority (PSA) data showed that in 2018, 1.26 million Filipinos were working in the following Middle Eastern or West Asian countries: Bahrain, Israel, Jordan, Kuwait, Lebanon, Saudi Arabia, Qatar and the United Arab Emirates (UAE).

From January to October last year, cash remittances from Filipinos living and working in the Middle East declined 7.8 percent year-on-year to $5 billion even as Kuwait, Saudi Arabia and the UAE were still among the top sources of inflows, the latest Bangko Sentral ng Pilipinas (BSP) data showed.

“If this [US-Iran conflict] devolves further or drags along, the sustained pressure on the peso and oil prices could fuel inflationary pressures, which would derail consumption momentum to some extent. However, if this is resolved quickly and the Jan. 15 signing of the phase-one deal comes back to light, we could see sentiment swing back to risk-on tone very quickly,” Mapa said, referring to the planned US-China trade deal signalling better relations between Washington and Beijing. (Stacy Ang/JGo/CurrentPH)

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