Local manufacturers refused to heed the call of the Department of Trade and Industry to reduce the prices of basic goods, stressing that the substantial decline in oil prices had been offset by the rising costs of raw materials, high shipping rates and the peso depreciation.
In a briefing on Thursday, Trade Undersecretary Victorio Mario A. Dimagiba maintained that manufacturers had enough room to roll back prices of basic goods, noting that the prices of certain raw materials—including skimmed milk, whole milk, butter milk, tin, meat, chicken, wheat and robusta coffee—had gone down in 2015 by a range of 4.7 percent to 29.56 percent.
According to the DTI, the manufacturers did not deny that prices of raw materials, fuel and electricity were declining. However, they explained that the drop could be offset by the high cost of trucking, shipping, foreign exchange rate and drought in Australia and New Zealand, which affected the prices and supply of meat products.
The manufacturers also insisted that trucking and shipping costs remained high while the depreciation of the peso had affected the prices of some imported materials such as tomato paste, starch, spices and other ingredients.
The Philippines is enjoying zero tariffs on its meat products importation from Australia and New Zealand, which translate to savings for importers. However, the drought in these countries pushed the prices of meat materials to increase, forcing manufacturers to import from Brazil and Ireland which impose a 10 percent duty.
In the meantime, data from the Department of Energy showed that retail prices of oil significantly declined in 2015 corresponding to a 25.81-percent price drop in diesel, 13.12- percent in fuel oil, and 4.27-percent in household liquefied petroleum gas (LPG).