DOF: Tariff cuts working, meat prices started going down

The reduction of import tariffs on pork has been bringing down prices of the commodity since the middle of last month, which is hoped to tame inflation moving forward, the Department of Finance (DOF) said .

“Imports should be able to address the shortfall in domestic supply and help ease meat price inflation. According to the Philippine Statistics Authority’s (PSA) survey, the price of pork (with bones) in most regions modestly declined in the second half of May,” Finance Undersecretary and chief economist Gil Beltran said in an economic bulletin.

However, Beltran said the lingering impact of the African swine flu crisis would continue to pressure prices as the domestic industry’s production remained affected.

Preliminary PSA data showed that hog ending inventory declined by 22.6 percent in the first quarter of 2021, Beltran noted.

As such, Beltran said hog repopulation would be the medium- to long-term measure to address the supply-side issue.

Meat inflation, especially of pork, drove headline inflation above the government’s 2-4 percent target band, which was deemed as a manageable rate of increase in prices in basic commodities.

As of end-May, the inflation rate averaged 4.4 percent year-on-year.

In a June 9 report, the Washington-based Institute of International Finance (IIF) said that “in Asean, we expect accommodative monetary policies to remain in place as inflationary pressures are moderate—except in the Philippines,” where “inflation has come in higher than the BSP’s (Bangko Sentral ng Pilipinas) target range for several months due to supply shocks.”

“However, as Governor (Benjamin) Diokno [had] emphasized, the BSP is likely to look through these transitory shocks to inflation. Inflation has already begun to decelerate in recent months, and we believe it to further moderate in the second half of the year,” IIF deputy chief economist Elina Ribakova and economist Benjamin Hilgenstock said.

The BSP expects inflation to end 2021 at 3.9 percent. —BEN O. DE VERA INQ