THE country could face renewed rice and food security pressures as the risk of a very strong El Niño continues to rise, Metrobank said.
“The likelihood of an intense El Niño has increased, potentially stoking consumer price gains and impacting investments,” the bank said in a market analysis.
It noted that the probability of an El Niño had increased to 82 percent for May to July 2026 and could climb further to 96 percent from December 2026 to February 2027.
It added that the possibility of a “very strong” El Niño event had also risen to 37 percent.
“Peak intensity is expected later this year,” Metrobank said.
The weather pattern, which is characterized by heat waves, reduced rainfall and possible droughts in Southeast Asia, could worsen inflationary pressures by reducing agricultural output, increasing food prices and raising electricity demand.
“The Philippines faces a more challenging inflation backdrop,” Metrobank said, noting that the peso remains weak against the dollar while oil prices and fertilizer costs have risen sharply amid geopolitical tensions and supply constraints.
It also warned that rice tariffs could increase from the current 15 percent to as high as 35 percent, potentially adding further upward pressure on food prices.
“El Niño adds another layer of pressure. Drier weather can reduce agricultural output and raise food prices,” Metrobank said.
“It can also increase energy demand, especially for cooling. Together, these factors may fan inflation and widen the trade deficit in the coming quarters.”
Metrobank has said that inflation could remain elevated in the coming month as the global oil crisis persists, forecasting the rate to average 6.3 percent this year.
It said that the country remained particularly vulnerable to rice supply disruptions due to its heavy reliance on imports from Vietnam and Thailand, both of which may also face weather-related production risks.
“There is also the risk of renewed export curbs from India, the world’s largest rice exporter,” Metrobank said.
It noted that in 2023, similar restrictions contributed to a sharp rise in global and local rice prices.
“In short, supply risks are rising at a time when buffers are already thin,” Metrobank said.
Stronger El Niño conditions could also widen the country’s trade deficit in the coming quarters as food and energy import requirements increase while domestic agricultural production weakens.
“Countries may impose export restrictions to protect domestic supply,” Metrobank said.
“This has happened before. Large producers of fertilizer and energy can limit global supply, raising input costs for agriculture.” NIÑA MYKA PAULINE ARCEO
