The Department of Trade and Industry (DTI) will not impose price ceilings on manufactured goods, relying instead on the promise of companies not to increase prices in the next few months.
Trade Undersecretary Ruth Castelo said that having price ceilings would only contribute to the rising inflation since manufacturers might lessen their production despite high demand if they find the price caps unprofitable.
At least in the next three months, prices of all products considered as basic necessities and prime commodities (BNPCs) will not increase after the DTI secured the commitment of manufacturers, she said.
DTI deferred from recommending the imposition of price ceilings, setting aside the push of consumer group Laban Konsyumer Inc. (LKI).
“On the business side, [manufacturers] might not deliver the supply to the market. They’ll wait for the price ceiling to end before they sell again,” Castelo told the Inquirer in a phone interview.
When the supply is lower and the demand remains bigger, this will contribute to inflation, which has risen to its highest in more than nine years.
Two big firms have vowed to keep their prices unchanged until sometime next year, the DTI said. The 3-month period for the others began on Sept. 1. It was unclear why manufacturers did not include the Christmas season in their promise not to increase prices.
The list of BNPCs covered by DTI’s suggested retail price— such as canned sardines, 3-in-1 coffee and corned beef—could be accessed online.
After that period, Castelo said that manufacturers that plan to increase their products’ prices would need to submit “new data for justification.”
Moreover, there are companies that committed to hold their BNPC prices longer than that, according to the trade official. She clarified that these only covered BNPCs, and not necessarily all of a manufacturer’s goods.
Procter & Gamble (P&G) Philippines, which produces the Tide detergent soap and the Safeguard toilet soap, committed to keep its prices for the next nine months.
On the other hand, Nestlé Philippines, whose products include the Nescafé Blend and Brew, vowed to put their prices unchanged for the next six months.
This developed after official data showed the prices of basic goods and services soared 6.4 percent in August, the highest in nearly a decade.
She said DTI reached out to these manufacturers even before the latest report on inflation came out, noting a meeting she had with company owners and representatives last month.
“We wanted to help the consumers and see if it’s possible for manufacturers not [to increase] their prices,” she said, when asked what prompted DTI to ask for the commitments.
Castelo said that not all manufacturers could commit to a longer timetable.
She cited the production of canned sardines as an example, noting the “very erratic” nature of their prices given the prices of imported tin plates and the seasonal catch of herring, the fish used for canned sardines.
The Price Act provides that the President may impose a price ceiling on any basic necessity or prime commodity upon recommendation from an implementing agency or the Price Coordinating Council.
Among other conditions, this provision could be activated in the “impendency, existence or effect of any event that causes artificial and unreasonable increase” in the price of a certain good.
This price ceiling could also be imposed when the prevailing price of a basic necessity or prime commodity “has risen to unreasonable levels.”