Weather shocks as well as supply and demand uncertainties may trigger another 4xfull-blown Asian food crisis this year and push up Philippine consumer prices by 1.5 percentage points, according to financial services firm Credit Suisse.
Taking off from National Statistics Office (NSO) data, this would mean that the inflation rate may jump to about 4.5 per cent by the middle of the year, from 3 per cent year-on-year in December.
In a nine-page report on Asian inflation, Credit Suisse said a repeat of the crisis seen in most of Asia in 2007 and 2008 "cannot be ruled out".
"In the worst case scenario, we assume that the UN Food and Agriculture Organisation food price index rises by a further 30 per cent from (present)," the company said.
The report, penned by Santitharn Santhirathai and Wu Ku Lung, noted that non-Japan Asia's (NJA) food price inflation in November 2010 was at its highest level in the past decade, except for 2007-08 when global food prices spiked to extraordinary heights.
"As such, it is no wonder that food price inflation is among the top concerns on investors' minds," the paper added.
"Recent flooding in rice exporting economies... and food inflation problems in China have led many investors and analysts to wonder whether the NJA economies are heading towards another food price crisis, similar to the one in 2007-08," Credit Suisse said.
Credit Suisse said it expects grain prices to rise by another 13 per cent to 14 per cent in 2011 from levels seen in the fourth quarter of 2010, which would translate into about an 8-percent to 9-per cent increase in NJA food prices in local currency terms.
The firm added that, based on this scenario, food inflation in Asia outside Japan might rise to about 15 per cent by mid-2011, translating to an additional 1.5 percentage points to inflation rates.
According to the NSO, the inflation rate for food alone - which accounts for about half of the overall inflation rate - remained at 2 per cent in December.
