Salceda optimistic food prices are beginning to stabilize

MANILA, Philippines — The slower headline inflation registered for January 2024 suggests that food prices are starting to stabilize, Albay 2nd District Rep. Joey Salceda said on Tuesday.

In a statement, Salceda said 2024 started on the right note because the January inflation picture showed that the lower prices of some products — like corn — were correlated with the costs of other goods.

“First, the continued divergence of the rice and corn sectors sharpens even further, as far as domestic price competitiveness is concerned. Corn prices actually became cheaper year-on-year, by 4.3 percent, which also dragged down meat prices by 0.7 percent,” he said.

“Domestic corn has historically shown its potential – which is why the DA’s (Department of Agriculture) ongoing and significant investment in corn processing systems is a significant step in the right direction,” Salceda said.

“The stabilization of onion prices, along with the vegetable harvest season, has also caused overall vegetable prices to go down by 20.8 percent. In other words, without the global rice price situation, which was completely an external shock, overall inflation would have been extremely low for January,” he added.

Earlier, the Philippine Statistics Authority reported that inflation was at 2.8 percent in January 2024, which is well within the government’s 2 to 4 percent target range.

READ: PH inflation slowed to 2.8% in January

It was lower than the 3.9 percent recorded in December 2023, and at the lower-end of the Bangko Sentral ng Pilipinas’ (BSP) predictions.

Upside risks for 2024

Salceda said he expects food prices to generally improve in 2024, but warned that there are still certain risks that may push inflation rates upward.

“The rice price situation could begin stabilizing after May 2024, when the Indian elections take place. India’s decision to ban non-basmati rice exports is essentially a political one, rooted in the desire to lower Indian market prices in time for the elections. Prices in India are particularly exacerbated by the substitution with wheat, which is an equally important part of the Indian diet. Wheat prices will not normalize until the Russia-Ukraine conflict is resolved,” he said.

“Another upside risk for 2024 is logistics costs which could rise due to ongoing attacks on international shipping by Houthi rebels in the Red Sea,” he added.

READ:  PH needs to boost rice yield, diversify import sources, says Salceda

According to the lawmaker, there is no substitute for lower inflation rates but to increase domestic rice production, and monitor products like corn which generally have an effect on other industries like poultry and livestock.

Need to increase production

“The way forward is to significantly increase domestic production of rice. It is doable. We have irrigated only about a third of our arable land. We have only planted some 0.6 million hectares with hybrid seeds, out of a target 1.9 million, with a total of 4.8 million hectares for the palay sector. Completing the target hybrid acreage will improve rice self-sufficiency from 77 percent to a healthy 90 percent – making us les susceptible to global rice price shocks,” he said.

“Cheap corn also demonstrates its importance as an input to other goods. We need to sustain investments in corn, considering its critical value for fisheries and livestock,” he added.

READ: Romualdez: Gov’t manages to tame PH’s inflation rate

House lawmakers like Salceda and Speaker Ferdinand Martin Romualdez have assured Filipinos that Congress and the executive branch are working on finding ways to ease inflation in 2024.  Last January, Romualdez said the government has effectively tamed inflation despite a challenging stretch on the latter part of the year.