Stubbornly high inflation? Blame rice prices, says DOF
Basic food items such as rice, fish, meat, and vegetables have been major drivers of inflation this year with the contribution of rice rising 10 times to 1 percentage point of the inflation rate, the Department of Finance (DOF) said Thursday.
In particular, data from the Philippine Statistics Agency (PSA) show that rice was the number one contributor to inflation in September 2018, while food items in the consumption basket accounted for more than half of the inflation rate in the same month.
In its presentation during the last Cabinet meeting, Finance Secretary Carlos Dominguez III pointed out that, in contrast, the contribution of non-food items such as electricity, gas and other fuels have slowed down since July this year.
“Rice tariffication and reforms in food policy are needed to address the repeated rice supply problems,” he told President Rodrigo Duterte and fellow Cabinet members recently.
The rice tariffication bill, once passed into law, is expected to liberalize the importation of rice in the country. It will also help lower rice prices while providing enough support for local farmers who will be affected by the influx of cheaper rice imports. This measure has been certified as urgent by Mr. Duterte.
Economic managers said liberalizing rice imports will lower the retail price of rice by P2 to P7 per kilo, and reduce inflation rate by 0.4 percentage points.
Among the short-term measures recommended by the DOF during the meeting were for the Department of Agriculture (DA) to undertake steps to bring down food prices, and for the Departments of Social Welfare and Development (DSWD) and of Transportation (DOTr) to speed up the release and distribution of cash cards to the poorest households and fuel subsidy cards to operators of public utility vehicles, respectively.
The release of unconditional cash transfers by the DSWD and fuel subsidies through the Pantawid Pasada Program are among the social mitigation measures under the Tax Reform for Acceleration and Inclusion (TRAIN) Act that are meant to cushion the impact of inflation on vulnerable sectors.
“Food inflation is the main driver of inflation, especially in recent months,” Finance Assistant Secretary Antonio Joselito Lambino II said in a recent briefing. “The DA, which is the key to bringing down food prices, has been empowered under several presidential directives to put in place measures to increase food supply and bring down food prices.”
These presidential directives include Administrative Order No. 13, which removed administrative restrictions on the importation of agricultural products.
The President also issued Memorandum Order 26 directing the DA and the Department of Trade and Industry (DTI) to implement measures to reduce the gap between the farm gate and retail prices of agricultural products.
MO 27, meanwhile, ordered the DA, Department of the Interior and Local Government (DILG), Philippine National Police (PNP), and the Metropolitan Manila Development Authority (MMDA) to “adopt measures to ensure the efficient and seamless delivery” of imported agricultural and fishery products from ports to markets; while MO 28 directed the National Food Authority (NFA) to immediately release existing rice stocks in its warehouses. /kga
