STRONGER government measures to improve agriculture productivity, as well as a strategic trade policy, are needed to address supply constraints that have further pushed consumer prices up, the Duterte administration’s economic managers asserted on Tuesday.
The Department of Budget and Management (DBM), Department of Finance (DOF) and National Economic and Development Authority (Neda) said in a joint statement that addressing the country’s supply constraints, especially on rice, will help curb the rising inflation rate that has confounded both the Executive and Congress, stalling the next round of tax reforms after various sectors blamed the high inflation on the first wave of measures, in the Tax Reform for Acceleration and Inclusion (TRAIN).
“The current price pressures emanate mainly from supply-side factors. Addressing supply constraints to curb inflation is the utmost priority of the government,” the economic team said in a joint statement.
The Philippine Statistics Authority (PSA) on Tuesday reported the country’s inflation rate for July hitting a fresh new high at 5.7 percent, coming from 2.8 percent in the same month for 2017. It is also higher than the inflation rate of 5.2 percent recorded in June 2018.
The higher year-on-year (YoY) inflation was explained to come from the spike in the prices of food and nonalcoholic beverages.
“Part of the supply problem is the country’s declining rice stock inventory—caused by weather disturbances in the country and in other rice-producing countries like Thailand and Vietnam—which is taking a toll on the prices of rice,” they added.
Rice stocks in July 2018, which reached 2.36 million metric tons (MMT), declined by 8.2 percent year-on-year from the 2.57 MMT in July 2017. This also posted a drop of 18.8 percent from the preceding month’s 2.91 MMT, with the National Food Authority’s (NFA) rice buffer remaining almost depleted. The secretaries of the economic agencies reiterated their position that amending Republic Act (RA) 8178, or the Agricultural Tariffication Act, will improve the local rice market.
Rice tariffs
The amendment of RA 8178, to replace quantitative restrictions on rice imports with tariffs, was also pointed out to bring down the price of the grain.
“This reform in agriculture will also provide a P10-billion enhancement fund for rice farmers that will help them have better access to technology and, thereby, ramp up their production,” they said.
The economic managers called on the Department of Trade and Industry and the Department of Agriculture to undertake stricter price monitoring, to ensure that no unscrupulous individuals or groups manipulate the prices of goods in the country. The inflation rate reported for July exceeds the full-year projection of the Bangko Sentral ng Pilipinas’s (BSP) for 2018 of between 4 percent and 4.5 percent. The economic team also pointed out that the country’s inflation rate is seen to taper of in 2019, or return to the BSP’s target range of 2 percent to 4 percent.
Last month DOF Undersecretary Karl Kendrick T. Chua said that the DOF wants three measures to be approved by Congress within the year, with two measures under the Comprehensive Tax Reform Program, namely Package 1B and Package 2, and the other being the Rice Tarrification Act.
Under House Bill 4904 or the rice tariffication bill is the proposal to amend the Agricultural Tariffication Act of 1996, prescribing import volumes to be removed and imports to be opened to private entities.