Domestic food price inflation remains high

According to the World Bank, domestic food price inflation remains high in many low- and middle-income countries.

Inflation higher than five percent is experienced in 70 percent of low-income countries (6.2 percentage points lower), 47.8 percent of lower-middle-income countries (three percentage points lower), 36 percent of upper-middle-income countries (two percentage points lower) and 9.1 percent of high-income countries (0.2 percentage points higher).

In real terms, food price inflation exceeded overall inflation in 59.8 percent of the 164 countries where data are available.

Since the World Bank’s last update on Oct. 18, the agricultural and cereal price indices rose by one and two percent, respectively; the export price index remained unchanged. Maize prices increased by seven percent, while wheat and rice prices fell by five percent, respectively.

On a year-on-year basis, maize prices are nine percent lower and rice prices are eight percent lower, while wheat prices are one percent higher. Compared to January 2020, maize prices are nine percent higher, wheat prices are three percent lower, and rice prices are 29 percent higher.

The November 2024 Agricultural Market Information System (AMIS) Market Monitor highlighted various price fluctuations and policy changes in global agriculture in October. Wheat prices reached multi-month highs, largely because of weather-related planting delays in the northern hemisphere, but later eased as conditions improved.

Maize prices also increased slightly, even with swift harvest progress in the United States, whereas rice and soybean prices fell. In policy moves, India removed the minimum export price for non-basmati white rice, and Bangladesh and Turkey relaxed import restrictions on maize, rice, and vegetable oils.

In the most recent Commodity Markets Outlook, the World Bank projects a four percent decline in the agriculture commodity prices index in 2025 before stabilizing in 2026, after a two percent increase this year.

The report also summarizes concerns about food insecurity and notes that the world remains far from achieving the goal of zero hunger by 2030. Conflict, extreme weather and economic shocks are the major drivers of food insecurity. It is projected that food prices will decrease by four percent in 2025 before stabilizing in 2026.

The latest Hunger Hotspots Report by the Food and Agriculture Organization (FAO) of the United Nations and the World Food Program (WFP) warns of worsening acute food insecurity in 16 hunger hotspots (covering 22 countries and territories) that will require urgent action between now and May 2025. Conflict, climate and the economy are the primary drivers of food insecurity. Conflict continues to be the primary driver of hunger in 15 hotspots.

The Philippines, thankfully, is not yet among the countries suffering from acute food insecurity.

Specifically for Asia, the World Bank reports that East Asia and the Pacific remain highly vulnerable to the impacts of climate change, with extreme weather events becoming more frequent and severe.

Weather forecasters predict that La Niña conditions will prevail from October onwards, contributing to a chance of above-normal rainfall in several countries, including the Lao People’s Democratic Republic (PDR), the Philippines, Thailand and Vietnam.

Last month, Tropical Storm Trami or Typhoon Kristine hit several provinces on Luzon Island in the Philippines, resulting in widespread flooding and landslides, leaving at least 126 dead and missing. Many areas remain isolated, with people in need of rescue.

The cost of damage to the agricultural sector in the Philippines from Typhoon Kristine was estimated at P3.11 billion, with 74,554 farmers affected across 11 regions.

Damaged farmlands covered 72,329 hectares, with a production loss of 160,107 metric tons. The rice sector was the hardest hit, with losses of 152,440 metric tons and a value of P2.87 billion. High-value crops suffered P121.08 million in damage. Damage to agricultural infrastructure, including irrigation facilities and other farm structures, totaled P67.66 million.

The Department of Agriculture, however, reported that at least 60 to 70 percent of farmers in the affected areas had already harvested their palay (unhusked rice) before Kristine made landfall. However, the DA also predicted that palay production would likely drop by 3.24 percent this year due to the continued onslaught of tropical cyclones.

Following Russia’s invasion of Ukraine, trade-related policies imposed by countries have surged.

The global food crisis has been partially worsened by the growing number of food and fertilizer trade restrictions put in place by countries aiming to increase domestic supply and reduce prices. As of now, 17 countries have implemented 22 food export bans, and eight countries have implemented 12 export-limiting measures.

The World Bank’s food and nutrition security portfolio now spans 90 countries. It includes both short-term interventions such as expanding social protection and longer-term resilience initiatives such as boosting productivity and climate-smart agriculture. The Bank’s intervention is expected to benefit 296 million people.

In May 2022, the World Bank Group and the G7 Presidency co-convened the Global Alliance for Food Security, which aims to catalyze an immediate and concerted response to the unfolding global hunger crisis. The Alliance has developed the publicly accessible Global Food and Nutrition Security Dashboard, which provides timely information for global and local decision-makers to help improve coordination of the policy and financial response to the food crisis.

Last year, the heads of the FAO, IMF, World Bank Group, WFP and WTO released a third joint statement calling for preventive action against a worsening food and nutrition security crisis, with further urgent actions required to (i) rescue hunger hotspots, (ii) facilitate trade, improve the functioning of markets, and enhance the role of the private sector, and (iii) reform and repurpose harmful subsidies with careful targeting and efficiency.

They appealed for countries to balance short-term urgent interventions with longer-term resilience efforts as they respond to the crisis.

Source: Business World

Construction material prices grew by 1.5 percent in Oct.

Retail prices of construction materials in Metro Manila grew by 1.5 percent in October, slightly higher than the 1.1 percent last year, according to data from the Philippine Statistics Authority (PSA).

On a monthly basis, the construction materials retail price index (CMRPI) was also higher than the 1.2 percent in September.

The PSA cited the increase to the higher annual spike in the heavily weighted tinsmith materials index at 2.3 percent from 1.5 percent in the previous month.

Likewise, three commodity groups posted annual increases in prices in October: carpentry materials at 0.9 percent from 0.7 percent in September; painting materials and related compounds at 2.5 percent from 2.1 percent; and plumbing materials at 1.0 percent from 0.8 percent.

An annual increase was also recorded in the price index of masonry materials at 0.1 percent last month from a 0.1 percent annual decline in September.

On the other hand, a slower annual increase was observed in the index of miscellaneous construction materials at 1.1 percent from 1.5 percent in the previous month.

The index of electrical materials, meanwhile, retained its previous September annual rate of 1.7 percent.

In an earlier report, the PSA said the wholesale price growth of construction materials in NCR slowed down in the same month compared to 2023. The construction materials wholesale price index's (CMWPI) 0.3 percent growth was slower than the 1.4 percent in October 2023.

A primary contributor to the CMWPI uptrend was the faster annual increase in the index of hardware at 0.7 percent in October from 0.5 percent.

Source: Manila Times and PSA

Manila still 3rd cheapest for prime office rent in Asia-Pacific

Manila remained the third most affordable city for prime office rents in the Asia-Pacific region in the third quarter, according to real estate consultancy Knight Frank.

On an annual basis, Manila’s occupancy cost fell by 1.7%, slightly below the average 2.5% decline in the region, a Knight Frank Asia report released on Oct. 22 showed.

The average prime office cost in Manila was $29.64 per square foot (sq.ft.) in the July-to-September period.

“Prime rents in the region fell just 0.1% on a quarter-on-quarter basis, signaling that rents could be bottoming out, supported by growth in Indian markets,” Knight Frank said.

Kuala Lumpur had the lowest average prime office rent in the region at $20.57 per sq.ft., followed by Jakarta with ($26.75), Phnom Penh ($34.13), Guangzhou ($35.60), and Bengaluru ($36.17).

The most expensive rent for prime office space was in Hong Kong SAR ($155.52), followed by Singapore ($125.66), and Sydney ($99.75).

Knight Frank expects Manila to see a decline in rents in the next 12 months, along with Bangkok, Beijing, Guangzhou, Hong Kong, Shenzhen, and Shanghai.

Cities that will see higher rents in the next 12 months include Brisbane, Perth, Ho Chi Minh City, Singapore, Taipei, Seoul and Sydney.

The average prime office vacancy rate in the Asia-Pacific region slipped by 0.2% quarter on quarter to 14.8% in the third quarter, ending consecutive quarterly increases since the second quarter of 2022.

Manila had the 11th highest prime office vacancy rate in the region at 14%. Kuala Lumpur had the highest at 27%, followed by Shenzhen (25.1%), Jakarta (24.9%), Bangkok (24%) and Shanghai (21.1%).

Knight Frank said companies across the region are keeping a close eye on costs amid slower economic growth and geopolitical risks. It noted that leasing sentiment will likely take a hit as firms curb spending.

“Global economic uncertainties have led to more cautious capital expenditure strategies among occupiers, favoring renewals and consolidating office footprints,” Tim Armstrong, Global Head of Occupier Strategy and Solutions said.

Companies that relocate their offices usually opt for smaller spaces, “aligning with cost mitigation needs and the growing acceptance of hybrid work models,” he added.

“While the business sentiment may improve as the Fed eases monetary policy, demand will continue to be tempered by prudent spending and workplace strategies focused on maximizing space utilization,” Mr. Armstrong said.

Knight Frank said the Asia-Pacific prime office sector will still be “tenant favorable” this year. With the delivery of around 12 million square meters (sq.m.) this year, the pipeline supply next year will likely drop by about one-fifth.

“However, as the development peak in the region subsides, any significant uptick in leasing activity could rapidly tighten the availability of prime spaces. This scenario may accelerate the flight-to-quality trend as tenants seek to upgrade their portfolios in a potentially more competitive market,” Mr. Armstrong said.

Source: Business World